Lifestyle Entrepreneurs Cannot Jeopardise Economic Development of Tourism Destinations

Subject: Business
Type: Analytical Essay
Pages: 8
Word count: 2076
Topics: Tourism, Entrepreneurship, Macroeconomics, Microeconomics


The tourism industry has several distinct characteristics from the traditional economy. The marketing activities are different in case of the travel sector, as it is harder to develop new products. The presence of lifestyle entrepreneurs in the tourism business is another special dimension of this sector, as these business owners tend to exhibit very different qualities. Lifestyle entrepreneurs place greater emphasis on improving the quality of their lives rather than increasing the growth prospects (Getz and Petersen, 2005). They are less inclined to make proper usage of natural and human resources available with them. On the other hand, they can make contributions to the economy by increasing environmental sustainability (Ahmad, Jabeen and Khan, 2014). The following section presents a discussion of the points in favour and those against the proposition that lifestyle entrepreneurs cannot harm the economic prospects of the tourism sector.

Arguments in favour

Quality of life as Opposed to Business Ends

The lifestyle entrepreneurs are often attracted to the tourism business out of their desires to improve their quality of life. A business can flourish only if the orientation of the businessperson is towards increasing the growth rate (Gollenia, 2016). On the other hand, research shows that the lifestyle entrepreneurs in tourism sector have a greater interest in living a better life close to nature and with lesser hardship (Ahmad, Jabeen and Khan, 2014). It has been found that the money that is invested in these businesses comes from the accumulated wealth from other professions or businesses. In other words, the lifestyle entrepreneurs do not consider profit making as the sole or even major motive behind the businesses. As a result, stagnation is a major issue that is faced by the businesses started by such entrepreneurs.


Figure 1 Butler’s Tourism Life Cycle

Figure 1: Butler’s Tourism Life Cycle

(Source: Butler, 2006)

The Tourism Life Cycle suggested by Richard Butler spoke of an evolutionary process in the tourism industry. After the first phase known as involvement, the development phase takes place, which is finally followed by the consolidation and stagnation stages (Butler, 2006). The evolutionary model is inspired by Darwin’s biological theory of evolution, but unlike the Darwinian schematic, in case of tourism the intervention has to come about from external sources for the stage of development to come about. In other words, there is no process such as natural selection, which will take care of the advancement of the business. Responding to the dynamically evolving market needs will require conscious effort, which lacks on part of the entrepreneurial businessmen, as evidenced by previous research. 

Low Level of Innovative Intent

The engagement with the tourism business by lifestyle entrepreneurs is rather low, as shown by existing studies. The bigger motivation is to enjoy a pleasant life that is not fast paced and a stress is give on personal enjoyment. This “family first” mentality stands in stark contrast with the overall economic objective that should be part of any business (Getz and Petersen, 2005). As Joseph Schumpeter had pointed out, the power of “creative destruction” that comes with capitalism can be largely attributed by the spirit of innovation latent in it (Ahmad, Jabeen and Khan, 2014). On the other hand, the lifestyle entrepreneurs are far more resistant to change, as they love to embrace tradition. Under the impact of globalization, the economies in both developed and developing are changing fast. The consumer preferences and practices are undergoing significant shift as well due to the forces of internationalization of business. As a result, it is harmful for the economy on the whole to rely so much on personal fulfilment rather than on the spirit of innovation. 

Irrational Management

The management of a business needs to take place in a rational manner in order for it to succeed financially. On the other hand, lifestyle entrepreneurs often set very mediocre business objectives and cannot maintain competitive edge (Getz and Petersen, 2005). Many of them are not trained in the best managerial practices and it has been observed that they are not interested in seeking professional support as well. As such entrepreneurs are traditional in outlook, they resist any takeover and hold on to their businesses even if they cannot properly manage them. It has been seen that such businesses in the tourism sector maintain a lot of distance from the mainstream economy. Such isolation from profit making centres causes further harm to a business, as employees do not get motivation that comes from competition. Previous scholarly work shows that the people, who engage in lifestyle entrepreneurship, are more interested in the beautiful scenery of the place or the local culture rather than stringent business objectives (Thomas, 1998). Furthermore, they do not give proper training to their staff, which is also harmful for the sector. The atomism of these lifestyle business start-ups in the tourism industry reflects in their lack of intent to be integrated into the sector as a whole. Their business motives are further hampered by their inability to take sound financial decisions, which help the growth prospects of the economy. 

Underutilization of Resources

The resources in the tourism sector are mostly of natural origins in addition to the skilled labour of employees. Empirical studies show that lifestyle entrepreneurs of this sector often fail to utilise the resources properly, as they lack the vigour to maximize profit making (Stone and Stubbs, 2007). The following graph shows how small entrepreneurs are more interested in earning a decent income that will satiate their personal and family needs. 

Figure 2 The Relation between Quality of Life and Business Growth

Figure 2: The Relation between Quality of Life and Business Growth

(Source: Baum, 2016)

As evident from the figure above, there is a direct correlation between quality of life and business goals. The lifestyle entrepreneur operating the tourism industry is more interested in reaching the point B, where the break-even point is only marginally crossed (Ateljevic and Doorne, 2000). The resources that could have been utilized to climb from the point B to a higher profitability position of D remain largely underemployed, which is harmful for the overall economy. Researchers have attributed this apathy towards the pursuit of higher profits to the greater emphasis on family life by the lifestyle businessmen. As the quality of life remains poor, an initial effort is put in by such capitalists in order to reach the point B. Once quality of life is improved, these business owners no longer feel the need to improve the profit to workload ratio. 

Arguments Against

Job Opportunities

The lifestyle entrepreneurs, who often belong to small, rural communities, have a major stake in the welfare and development of their localities (Getz and Carlsen, 2005). Governments of the emerging economies like Malaysia are interested in the development of these communities through the promotion of tourism (Ahmad, Jabeen and Khan, 2014). The travel sector is greatly benefited by the emergence of many small hotel owners that are lined along sea beaches and other sites of natural beauty. This creates job opportunities for many people in these areas, as several employees are needed for a wide variety of tasks related to the hotel sector like cooking, washing and cleaning. Site seeing is an important element of the tourism sector, which requires labour in the supporting transportation networks. Labour is required in the form of guides and caretakers, who can provide security to only the guests but to their belongings as well (Murphy, 2013). 

Research conducted on the intentions of the entrepreneurs, shows that they are inclined to take risks. The perception of the lifestyle business owners in the tourism sector towards business failure is quite positive, as they are less interested in competition and more engrossed in developing their immediate surroundings (Dawson, Fountain and Cohen, 2011). 

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Environmental Preservation

The connection between environment and tourism has been studied previously by researchers in this field (Tang, 2015). One of the reasons, for which the small community-based tourism businesses crop up in Third World countries, is that they receive government patronage (Ahmad, Jabeen and Khan, 2014). As the business initiators have a good knowledge about the locality, including the flora and fauna of the place, where the business has come up, they are able to protect the environmental assets better than conventional firms (Hall and Page, 2014). This has a positive implication for the sector, as environmental regulations are likely to be followed by these firms. It can be inferred that the overall carbon footprint of such businesses will be low, as the owners develop positive relations with the tourists and can therefore encourage them to adopt policies that are in tandem with international bodies on environmental governance (Cederholm and Hultman, 2010). Research on entrepreneurial investment in surf tourism, for instance, shows the interest for environmental conservation (Thomas, 2013).This is consistent with the observation that eco-entrepreneurs are interested in alternative lifestyle while also pursuing more altruistic, environmental objectives (Swan and Morgan, 2016).

It has been observed that a shared governance model is ideal from the perspective of local looking after the environment (Mowforth and Munt, 2015). Various stakeholders, who are dependent upon the local natural resources and draw their sustenance from the same, are ideally suited to rectify the environmental concerns. It must be noted that companies in the tourism sector have to grapple with a growing customer interest in sustainable activities (Holden, 2016). The concept of “green tourism” can be utilized by the smaller entrepreneurial businesses in this sector (Horner and Swarbrooke, 2016). It must be noted that the firms, which engage with the customers, frequenting the hotels in the tourist locations, can inculcate a sense of responsibility towards the environment, like raising awareness about declining forest cover or the rapid disappearance of any endangered species. 

Sustainability has become a crucial dimension in all the business sectors, primarily in the wake of attention to the cases of environmental degradation caused by big multinational companies (Smith, 2014). Many big firms have joined hands with governments in order to provide better training to their staff so that they can carry out commercial activities in a manner so as not to cause damage to the natural surroundings. In this respect, the small lifestyle entrepreneurs provide a good opportunity to improve the sustainability quotient of the economy, as they not only possess the required knowledge, but also have a strong motivation to maintain the ecological balance of their localities (Peters, Frehse and Buhalis, 2009). Due to the fact that such entrepreneurs have a good relationship with the local people; it is easier to motivate the stakeholders to take actions after considering the environmental implications. 

Cultural Tourism Through L0cal Heritage

The cultural capital of many developing economies is an important part of their revenue generation model (Ahmad, Jabeen and Khan, 2014). The companies involved in the tourism sector try to leverage the reputation of the locations for various cultural artefacts, buildings, museums as well as the natural beauty. Research shows that international goodwill can be generated through tourism, as relations with the countries from where the tourists are visiting, are likely to improve (Mason, 2015). The local culture of any country should be adequately understood by tourists, and in this respect the lifestyle entrepreneurs will serve a great purpose, since they are very knowledgeable about the history of the locality. Even if the entrepreneurs do not hail from that place, they can hire employees, who can serve as experts about the place (Blichfeldt, 2009). 

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Work After Retirement

The lifestyle entrepreneurs often start their business after retirement (Page, 2014). The aged people often start a business in the tourism sector, as they want to relax after their retirement. This has a positive contribution to the economy, since their productive work increases the GDP of the country. If older people would not have worked, they would have remained on social security, in other words, they would have remained unproductive. This reduced dependency is also complemented by the fact that the older generation has greater time at their disposal and can devote a greater proportion of it for the successful completion of the tourism projects.


For lifestyle entrepreneurs, financial growth is not the main motivating factor, as improvement of family life is more important for them. These entrepreneurs do not make planning in a rational manner. The lack of managerial training gets reflected in the fact that many of the tourism lifestyle entrepreneurs make poor financial plans that can have detrimental impact on the feasibility of their business. However, they can make important contributions to the economy through protection of environment and creation of jobs in the travel sector. 

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