This is solution of Nelson College Contemporary Issues in Travel and Tourism Assignment given for the course of HND Travel and Tourism.
Tourism is an important industry across globe. Unlike past when travel activities were focused on trade and food related requirement. Purpose behind travelling has completely changed today. People today travel for the purpose of recreation and relaxation. However with change in time tourism sector has also undergone several changes and has become extremely competitive. Economies of several countries today is dependent on tourism sector. That is why development of tourism sector has become extremely complex and challenging for all the businesses involved in the tourism sector.
With rapidly changing business environment it has become important for travel agencies and tour operators strategic planning in a structured manner, considering all the factors impacting the tourism sector. Thus this particular assignment is aimed towards exploring various issues which the travel and tourism businesses are facing in present scenario.
P1Understand current issues in the travel and tourism sector
P1.1- Analyse issues currently driving change in the travel and tourism sector
Landscape of travel and tourism sector is a constantly changing with time. Similarly issues which drive the change in the travel and tourism sector also vary from one place to another. An issue can be defined as a topic for discussion and debate-something which is perceived differently by different people (Gay, 2012). Related to issues which are driving the changes in the travel and tourism sector, people, tourism agencies and government bodies all have their own view point on but there seem to no simple solutions or remedies to these issues. There are several issues which suddenly come to prominence such as 9/11 attacks or London Bombings of July 2005.
Thus it is important to understand the difference between such events and the underlying issue-which in this case is terrorism impacting the travel and tourism sector. Analysis of such issues is important since it has huge impact on travel and tourism sector. And for many countries this sector has significant contribution in nation’s GDP. For example France which is one of the major tourist attraction for travellers across the world, has a major contribution in its GDP from travel and tourism. As shown by the graph below travel and tourism generated a total impact of $257 billion of France GDP in 2011.Figure 1: Impact of Travel and Tourism on GDP of France.
Based on above graph, it is clear that why travel and tourism sectors is critical for nation’s economy. That is why each and every issue which drives the change is important to analyse. In order to understand better and have clear picture, this task has taken French travel and tourism sector as point of reference.
Following are the issues which can be listed down as the one driving the change specific to French travel and tour
E-tourism: E-tourism can be defined as use of information communication technology (ICT) to enable tourism providers and various tourist destination to operate in an integrated and efficient manner. It also enables the tourism providers to reach and serve their consumers in an effective way (Filimonau et al, 2014). Being one of the largest and fastest growing sector in world, travel and tourism sector is as exposed to any changes in ICT as any other sector. Travel and tourism sector has aggressively embraced the various changes happening in ICT for at least the last 50 years. Today online travel portals for making online bookings of flights, hotels along with their capability to search, compare and buy tourism products has completely revolutionized the sector. Advent of internet has a far reaching impact on the travel and tourism sector. ‘Travel’ has become one of the single largest category over internet. Penetration of internet can be understood by below graph, which clearly indicates that Europe is one of the most connected continent.
In France there is already a high rate of internet penetration even before economy meltdown happened. With 2012, this trend further consolidated since recovery of French economy failed to revive, with consumers and business pressing hard to seek best value for money. Irrespective of the fact that offline sales were having single digit growth in France, online business channel remained robust and achieved a double digit growth. Most of the travel and tour operator are now consolidating their business in France and increasing their online foot print (McCabe et al, 2011). With French having high penetration for broadband connection and smartphone ownership, this trend is expected to expand further. With growing use of internet by French population and tourist visiting the country, tour operators and rail companies are focusing extensively on more and more opportunity through web channel. Hence E- tourism can be identified as one such ‘issue’ which is driving the change in travel and tourism sector of France.
Transport System Development: Transport system is a crucial element in the structure of travel and tourism. However with rising pollution, and increasing carbon foot print, countries today are sensitive towards are more sustainable tourism model. France which sees millions of tourist every year has several mode of conventional transport such as train, bus, tube etc. tourist place which are ecologically sensitive in nature cannot be exposed to the pollution from these mode of transport (Blanke & Chiesa, 2013). That is why France has been aggressively pushing towards concept of ‘new mobility’. This model of ‘ecological walks’ is being promoted in Paris, with focus on sustainable tourism. For example within Paris city tourism authority is pushing for use of bicycles, hybrid taxis and electronic vehicle. This is being done in order to reduce Carbon Dioxide emission in the French capital. For example on website of RATP (which is also known as the Régie Autonome des Transports Parisiens is a state-owned public transport operator headquartered in Paris, France) it is possible for a tourist to select the most 'ecologically sound' method of transport for his journey. This research itinerary program is so advance in nature that it is even equipped with an atmospheric measure that reads and analyses the emission of toxic gases for each type of transport. Thus transport development is another issue which has been a major driving factor behind change in French travel and tourism sector.Figure 2: Urban Cab in Paris, which is driven on electricity with nil CO2 emission
Use of Social Networks as Communication tools: As discussed in above section, which mentions about high internet penetration in country. One major issue driving the change is extensive use of social networks. Applications and websites such as Facebook, twitter, and other social networks have become an integral part of French citizens. This trend has impacted on the way these tourist and other consumers access promotion, resolve customer service issues or make decision related to purchase. With high usage of smart phones and tablets, French retailers of tourism product are selling directly to consumers through social networking platforms. Hence it can be observed that issue such as social network usage has changed the concept of retailing of tourism product. And accordingly French tour operators and agencies are adapting to these change drivers.
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Climate Change: This issue is a major one, and has a negative impact on the growth of tourism in France. As a country France has apprehensions that risk of melting snow, water shortages, and fast disappearing beaches might erode its image as a popular tourist destination. Primary reason behind this apprehension is the concept of global warming. With increase in global warming, there has been gradual increase in sea level in France which has resulted into erosion of coastal region.
World famous Alpine ski resorts are also expected to be hit because of gradual melting of snow. Under such circumstance winter sports will not be feasible at an altitude of 1,200 meters (Cook et al, 2010). Hence tourism and travel sector is particularly worried of issue like this which is driving various changes such as ecological and sustainable tourism and focus on reducing CO2 emission by various eco-friendly solutions.
P1.2- Analyse different current issues using appropriate methods and resources
France is one of the world’s biggest tourist destination. Over a period of time, especially since last 4-5 years, it has been struggling to cope up with number of issues related with its travel and tourism sector. Analyses of these issues and information on the policies for maintaining, showcasing and promoting historical and natural heritage has been procured through various French tourism and travel related and by reading various reports such as tourism and travel competitiveness report etc.
These issues are not restricted to some specific area, in fact these issues are diverse in nature. There are several issues such as forest fire, oil spills, performance artist strike, economic downturn and Euro strength which are impacting French travel and tourism. Because of various issues France slipped to 7th position in travel and tourism competitive report of 2013. In 2011, France occupied 3rd position in the same index (Peeters & Dubois, 2010). Although France continues to attract several tourism for its rich cultural heritage, it is also famous for its international fairs and exhibitions. However overall policy rules and regulation framework is not considered to be supportive of the entire sector. In fact as per the T&T competitiveness report for 2013, prioritization of travel and tourism sector has been ranked 35th overall.
French tourism has been undergoing highly complex, interdependent and interconnected era. Tourism agencies and tour operators in France has been facing major adaptive challenges as well as profound transformational opportunities (Ashworth & Page, 2011). As per World Economic Forum’s Global Agenda Issue Survey some of the most critical issues identified for French tourism are:
- Systematic financial failure
- Chronic fiscal imbalances
- Severe income disparities
- Persistent structural unemployment
After France suffered the financial crisis of 2007-2008, its economy along with global economy has faced deepest setback in decades. Despite of recovery from that phase, volatility has remained as one of the key risk to further development in various aspect such as financially, economically, politically and environmentally. As depicted in below figure all these issues are having significant impact on the French tourism sector.Figure 3: Issues and change drivers for French Travel and Tourism
French policy makers who are responsible for developing and growing France as a successful tourist destination have been facing variety of issues which are acting as change drivers for the French tourism sector. French tourism sector has been getting stagnated especially due to outdated polies being formulated by the policy makers. Today it is important for these policy makers to focus on more sophisticated methods in order to nurture development of travel and tourism sector by successfully increasing the inbound tourism in France (Ryan et al, 2013). It is important for these policy makers to have new capabilities in tourism management and sector development.
France has been focusing on long established destination management techniques such as advertising campaigns, or thematic fair or exhibition based on travel and tourism. Such techniques are outdated now. Based on internet penetration rate in France, it can be clearly observed that online platform are fast replacing the physical platforms of retailing tourism products. Communicating to traveller through online medium and various other innovative communication strategy needs to be used by destination managers and developers in France (Palomino-Schalscha, 2013).
Another major issue which is staring in face of French tourism industry is global warming.Figure 4: Global Warming Representation-One major cause behind several issues.
Global warming can be defined as gradual rise in Earth’s surface temperature, which results into drastic change in climatic condition across globe. Tourism related activities has been considered as one of the major reason behind global warming. France has been witnessing a rapid erosion of its popular beaches. Rising sea level has been gradually eroding the beach front. In summer when inbound tourist are at its peak in France, then there is severe scarcity of water. In such situation what will a country do? Provide water for recreational purpose or for essential activity such as agriculture. Global warming has also been impacting the snow covered Alpine ski resorts. With ice melting down, tourism in this area is getting affected.(see solution of Unit 1 Contemporary Hospitality Industry)
P2. Understand current trends in the travel and tourism sector
P 2.1: Evaluate current trends influencing change in the travel and tourism sector
Following are the trends which are influencing change in the travel and tourism sector:
Technology: Technology today has a major impact on the how the travel and tourism sector operates. It has completely changed the landscape of the sector. Unlike past when a tourist has to be dependent on a tour operator for his booking of holiday, today click of few buttons can do the trick for him. Technology has significantly reduced the cost of operation incurred in the travel and tourism business. Tour operators and agents can provide their services from web platform itself. Use of technology today spans from airline, hotel booking, transportation etc. This has given flexibility to an end customer to choose out of the best possible option. Impact of technology is not only on B2C level, but it is also on B2B level. Today business such as airlines, and hotels collaborate with each other to derive benefit from each other. Internet, smart phones and tables have completely revolutionized the concept of travel and tourism sector.
Climate changes: as discussed in many of the section above, climate change is a major cause of worry in present situation. It has become a major trend which is influencing change in the sector. For example because of global warming people are unable to enjoy snow covered mountain of a place like France, since every year there is ice meltdown because of earth’s temperature. With this factor, tourists today accordingly plan their trip.
Political instability: This is one such factors which creates a situation of confusion and panic in hearts of the tourist. However with rising political instability many countries have to loose huge of amount revenue from tourist sector just because tourists are not willing to visit an instable country.
Thus above mentioned are the major trends which have significant impact on travel and tourism sector in long run.
P 2.2 Analyse a current trend using appropriate techniques and resources
Current trends as discussed above are extremely important in positive growth of travel and tourism sector. Factors such as political instability can be analysed on the basis of the number of inbound tourist in a specific country. For example if 5 million tourists visit Germany in 2012 and in 2013 it falls down to 1 million. Then there is a clear situation of something major happening at the tourist destination. For example a country like Egypt which saw political uprising more than one year back, however it is still recovering from those aftershocks, as there was huge chunk tourist who backed out from their trip at last moment (Mariani et al, 2014). Climate change is another important aspect which needs to be discussed. There are various methods like measurement of average earth’s temperature or metrological level warning which needs to be carried on in order to understand the impact of temperature on travel and tourism business. Measurement of internet penetration is another important method through which it can be estimated that how strong is the presence of travel and tourism sector through portals such as Expedia etc.
Thus above trends are important because it casts shadow of numerous implications which can happen with travel and tourism sector. Hence it is important to clearly understand these trends and accordingly fine tune the overall strategy of the company.
P3. Understand how the travel and tourism sector responds to change
P3.1 Analyse how travel and tourism businesses could respond to change
Travel and tourism sector is an important sector for a country’s economy. Being a high growth sector, businesses operating in this sector have to be prepared for various changes such as political, economic or social. These businesses need to have proper and efficient strategy in order to tackle such changes. Before analysing the strategies which can be implemented to handle these changes, it is important to discuss about various factors which have impact on the travel and tourism business of a specific tourism destination. Student being from Romania, a tourist destination specific to Romania has been chosen. Bucharest is the chosen tourist destination. Capital of Romania- Bucharest has almost 3 million inhabitants and is 6th largest city of Europe. Bucharest is considered to be located strategically within Europe hence encountering various institutional, accessibility, economic and physical challenges.
Tourism in Bucharest is an important source of GDP. With 7-9 million tourists visiting Romania, majority of these tourist first visit Bucharest which is now an important tourist destination. For example number of inbound tourists saw a jump of approximately 100 % from 4.8 million in 2002, to 9.0 million in 2008. In such circumstance it is critical to analyse that what are the factors or changes which might impact the tourism business in Bucharest, and how it will respond to such factors or changes (Kovacevic, 2013). In order to analyse these factors SWOT and PEST analysis can be considered. (See here: Tours Operations Management Assignment)
Apart from SWOT analysis, there are various other external as well as internal factors which can be analysed through PEST analysis. These factors have been listed below:
Political Factor: Romanian politics has been undergoing a phase of evolution which has resulted into certain instability in the country’s political system. Such scenario where government and politics is not stable at times hampers the growth prospect of a region as a tourist destination. With Bucharest being the capital city, it is the heart of all the administrative and political activity. That is why tourists avoid the places or destination which are political epicentre of a country.
Economic Factors: These are the factors which include highly complex structures. These factors include several other aspects such as external and internal market; rate at which economic development is happening, purchasing power of people, inflation, government policies, currency rates etc. These factors have enough capability to have a major impact on the tourism of Bucharest.
Poor government strategies and lack of commitment from government has resulted into poor development of various tourist spots across Bucharest.That is why tourism in Bucharest has been lacking competitiveness despite of having huge potential in it as a tourism city. Thus as a respond to these factor, government of tourism should come up with steady plan and commitment to bring focus back on tourism development. Also the strategy around promotion of tourism should focus on the gaining more of the upper end of the market. This will help tourism sector to increase its quality of services, and generation of more revenue from the sector.
Social and Technology Factors: these factors includes aspects such as rural and urban population; social environment, customs and traditions; education level etc. Through various studies it has been identified that these factors play a crucial role in shaping attitude towards tourism activities as well as how the employees in this sector behave. Lower occupation rate in Romania is one opportunity which have positive impact for labour market even if industry sees a negative growth. Apart from social aspect, technology is also an important aspect which impacts the travel and tourism business. In terms of being capital city and located at a strategic location, Bucharest has access to most of the latest development in technologies. These technologies can be used effectively in promotion and development of its popular tourist destinations within city. Thus tourism agencies should plan their tourism strategy in such a way that it includes the labour market which is available to work in tourism sector of Bucharest.
P3.2- Develop strategies on how selected travel and tourism businesses could respond to change
In order to be capable of developing strategies, it is first important for these businesses to understand the meaning of strategy. A strategy is very subjective in nature. However for ease of understanding, it can be defined as a plan or roadmap to achieve an objective or a purpose.
Within travel and tourism sector of Bucharest there are several businesses which help the sector to sustain. For example, airlines, hotels, food and beverages, tour management etc. Bucharest being capital of Romania is one of the important European holiday destination has several travel and tourism businesses. With economic crash of 2007-2008 these travel and tourism business are yet to recover. That is why it is important to understand that such businesses should be prepared with their response to any such change which might have negative or positive impact on it.
For a tourism business to respond to a change it is important to analyse the following aspects:
- Identification of resources, and what all are the core competencies of the business which needs to be developed and exploited.
- Evaluation of various ways through which value added activities are organized.
- Business should be able to identify its area of weakness which needs to be addressed in future formulation of strategies and their implementation.
- Businesses should be able to measure the success or performance of their tourism product.
- Evaluation of how the business is performing in terms of finances.
- Travel and tourism business should also evaluate the option of investment, especially in a situation when finances are being arranged from an external sources
- Travel and tourism business should be able to assess their performance and future requirements related to human manpower. (wanna know! Website Document Assignment)
Thus above mentioned strategies if applied in a structured manner, then it can give immense insights on a travel and tourism business in Bucharest and the way they respond to a change.
P3.3-Justify strategies for how selected travel and tourism businesses could respond to change
As discussed above following strategies has been identified on how travel and tourism business could respond to change:
Identification of resources, and what all are the core competencies of the business which needs to be developed and exploited:
Justification: For any travel and tourism business to succeed it is important that it should be aware of all the resources available to it. Also it should be able identify its core competencies. Because when a business is aware of its core competencies and available resources, it can then accordingly plan its future strategy related to operations, finance, marketing planning etc.
Evaluation of various ways through which value added activities are organized.
Justification: Every travel and tourism business should be able to identify various ways through which value added activities can be organized. This is important because today diversification is very important, hence organisation of value added activities or services gives a customer an extra take away in terms of products and services.
Business should be able to identify its area of weakness which needs to be addressed in future formulation of strategies and their implementation.
If a travel and tourism business is aware about its weakness then it is a good signal. With knowledge about its own weakness, business will avoid any such decision which can have negative impact on its growth potential
Businesses should be able to measure the success or performance of their tourism product.
Justification: Every travel and tourism business should have a well-defined and measurable matrix to measure its performance or success. With identifiable goals and objectives companies basically remains focus on their core objective.
Evaluation of how the business is performing in terms of finances.
Justification: Have control and visibility of finances and how business is managing and performing in terms of it is very important. Since finances helps a company to operate.
Travel and tourism business should also evaluate the option of investment, especially in a situation when finances are being arranged from an external sources
Justification: Investment is an important tool these days for travel and tourism business to diversify or add new services. That is why it is important for companies to know that how the finances are being arranged, and what is the credibility of the external sources.
Travel and tourism business should be able to assess their performance and future requirements related to human manpower.
Justification: No business can execute in absence of able manpower. Hence it is important that a travel and tourism business should be clear about its manpower requirement and their overall allocation or de-allocation from the organisation.
P4. Understand the impacts of change on the travel and tourism sector
P4.1 Analyse the impacts of issues and trends that drive change in the travel and tourism sector
Introduction: This part of assignment is focused on analysis of various factors which affect the operation of a travel and tourism business. In travel and tourism business there are several factors which play a major role in the operation of the business. For example customer, competitors and various other market forces. In order to analyse these factors, Cox & Kings has been considered as the company on which analysis has been done.
Travel and tourism business is an extremely sensitive business. It gets impacted from several factors. That is why it becomes important for companies to properly strategies their operation with taking into consideration all such factors in the process of decision making. Below mentioned are these factors and their impact on the operation of Cox & Kings.
Customer Segmentation: Cox & Kings is a famous tour operator which has proven track record of success. However with change in time, there has been significant transition in the customer segment which approaches C&K for their holiday related requirement. With increase in purchase power, C&K has now started focusing on the middle level income group as well. And it has also been aggressively expanding its base in growing countries in order to capture such customer segment.
Online Travel Portals: Online travel portals such as Expedia etc. has created a huge difference how the business is being done. Moving away from brick and mortar business, C&K is now focusing extensively on improving its online presence. With its dedicated website, it has been aggressively servicing its customer through online medium.
Government Regulations: With opening up of tourism sector, and especially British tourism sector, there has been stiff competition for Cox and Kings from other operator such as Thomas Cook, SOTC etc. British Government is also encouraging more tourism and travel companies to establish their businesses in the country, which has resulted in market fragmentation for Cox and Kings.
Economic recession: This is one such factor which has direct impact on the business of Cox and Kings, especially since economic recession of 2008, European tourism sector has witnessed slow growth. With Cox and Kings pricing strategy being on higher end, growth has been sluggish for the company. Thus Cox and Kings should further rationalize their pricing strategy in order to make it market relevant.
Based on above discussion and facts, it can be easily understood, that how important is travel and tourism business for a region. Businesses functioning within travel and tourism business need to understand the importance of strategy. Tourism sector is one such sector which gets affected because of political, economic, and social imbalances. Tourism business should focus on analysing these factors and they should ensure that there growth and promotional strategies are formulated on the basis of analysis of such factors. With an extremely dynamic environment and volatile market situation, even a small issue associated with tourism business can have significant impact on entire sector.
For example bird flu, which resulted in major downfall of tourists in South East Asian countries. Such examples reflect that how an incident which the tourism business might not have considered as a factor impacting the business eventually impacts the business on large scale. It is also critical for business to remain integrated with various government and international tourism regulatory bodies. With such move it is able for companies in tourism business to remain updated about various trends in the sector, and also various rules, regulations and compliance to which they need to adhere. Hence travel and tourism business should ensure that while creating their growth strategy they should consider these aspect as well. With all round focus on various external and internal factors along with strength and weaknesses tourism business can ensure positive growth of the sector.