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Travel and tourism sector is an industry which comprises of exchanging tourists within countries and provide them with all necessary facilities. The industry as a whole consists of travel sites, tourist spots, world heritage sites, travel modes like air, road and sea, travel infrastructure to reach those destinations, immigration, staying facilities, like hotels guesthouses, motels, etc. and the security and safety of tourists. The assignment is going to cover topics which describes travel and tourism sector as a whole, its characteristics, its connection with political changes, demand and supply, and the overall effects of tourism on social, economic, and environmental changes. The sector which the report will cover is the economic, social, environmental sectors, including the effect of local and national policy which affects the industry. The role of government in supporting the travel and tourism sector is inevitable because this helps the government to earn foreign income in the form of travellers spends when they visit their country.
Travel and tourism sector has been evolving since ages and it kept growing with the growth in the transportation industry. As routes to distant locations opened up with cutting down travelling time, number of tourists increased and with this the governments stepped up their efforts in providing for these tourists with the best facilities and a market where they would feel safe and would invest and spend to help the local economy.
Bath is a great city in South West England and was founded by the Romans in the 1st century AD (Whc.unesco.org, 2014). The city became and important centre for the wool industry in the Middle Ages but under the governance of King George 1, 2 and 3 I the 18th century, the city grew into a spa city which was famed in art and literature. In 1830, Princess Victoria opened the Royal Victoria Park, which was followed by the opening of the Kennet and Avon canal which eased transportation (Visitbath.co.uk, 2014). This was followed by opening of the Great Western Railway. Such events of opening new facilities kept up filling the tourist from closer countries and then later on from different parts of the world. The primary reason for developing transportation infrastructure is to offer a convenient travel opportunities to tourists for which they have come to the city. This shows that how infrastructure is strongly connected to increase in tourist flow inwards, and developing facilities in the city helps the city to earn foreign currency when the tourists spends. The city then started to hold literature festivals and showcased Roman culture remains which dates back to the 1st century. Many buildings and architectural marvels are being very old, such that the entire city has been declared as a World heritage site by the UNESCO.
The city is primarily a heritage and cultural tourist city, and hence the type of tourists visiting the city also are different from the usual tourists. The infrastructure improved with the changing governing pattern from kingly dynasties to voting based selection of leaders. Support from the government also helped in developing the necessary image of the city which it is today. The present situation is pretty interesting with thousands of tourist visits every year and a host of industries growing because of its connection with the business minded cities of UK.
The travel and tourism sector is one of the largest industries in most countries and it is responsible for the maximum employment in some countries. The structure differs from country to country depending on the internal resources, access to cheaper finance, private sector participation, and government’s tourist friendly policy which allows the industry participants to fully exploit the best out of the available advantages. The distribution channels between suppliers and consumers in the tourism industry create the link through which information is being provided along with a mechanism where consumers can pay for the services and reservations (Pearce and Tan, 2004). This link is of utmost importance in the industry because it provides the necessary infrastructure to consumers, which otherwise had not option to access such locations and services. The tourism industry consist of a complex interwoven links of public sector private sector, and individual businesses which connects to provide a single marketable product to the consumer.
Bath is a city with many heritage and cultural sites and the UNESCO tag is to its advantage of attracting a specific type of customer base. Since such tourist are few and rare, Bath is able to receive a significant attention from these tourists who are interested to study ancient culture and civilization of the past. Bath has a simple tourism structure which operates under the government’s role of tourism along with private sector participation. Hotels are growing in numbers through private investments and government s helping the city by forming appropriate policies for the industry’s smooth operations. Travel agents are operating within the policy structure and they have a cordial relationship with each other. Because of transportation to and from important cities, Bath is receiving a lot of tourists. The travel agents association is registered with the agents of other cities and they provide combined services to tourists visiting Bath. The government is helping in keeping the cultural value intact by marketing the city as a cultural hotspot mixed with modern thinking. The city is also linked to other cities of other countries through which road transport becomes easier. The entire industry is structured in an easy operation style and everyone is working to compliment and support each other.
Source: (Mukherjee, 2014)
The service industry catering to the visitors which includes food, laundry, transport, retail, banks, foreign exchange, taxis, buses, trains, and other associated service industries are also working in close coordination for making the customer the most important element in their services.
Government is the single governing authority in a country and they are further divided into smaller councils for each city or a region. Travel and tourism sector consists of a lot of natural sites which are considered as a national ownership of all. To govern this, it is necessary to have a system by which the resources will not be exploited for personal use by the managers, but it will be so developed into a system where everyone will be able to make use of it in a non-threatening way. Most governments usually has a ministry dedicated to travel and tourism which looks after the development of the industry in the city or a region. The role of this government ministry is to promote the developed sites to other countries in the form of marketing campaigns, site specific marketing and promotions, participating in international exhibitions to showcase the city’s travel strengths and sites. The government can also sign bilateral trade contracts which enhances tourism between two countries by removing lot of trade barriers and tariff like service tax, value added tax, and transportation tax, etc. this could increase the number of arrivals as their spending per person will decrease and they will be able to spend more on leisure for themselves rather than paying for taxes.
Government sponsored bodies are also autonomous bodies which act on behalf of the government. These could include semi-government companies, specifically designed promotion organisations, etc. Their role is to promote the tourism products to different countries and explain the finer lines of the importance of certain sites and spots.
International agencies are bodies which promote multi-cultural tourism and encourage visiting to each other countries. These organisations usually promote countries with common interests, so that every participating country achieves their internal goals (Holloway et.al, 2009). Thus government, government sponsored bodies, and international agencies operate to promote their own tourism products, increase cultural mixing, and help each other to reach individual goals by serving common interests. Agencies like World Tourism Council, United Nations, International Air Transport Association, etc. all work towards supporting each other and enhancing the business of individual participant countries.
Local and national economic policy tend to have its effects on all sectors and not only the travel and tourism sector. Government’s job is to increase inward income by attracting investments by providing an environment conducive for investments and making the investors feel secure about their investments. The macroeconomic model of operations is very important to understand the presence and importance of the travel and tourism industry in the country’s policy context.
Source: (Tribe, 2005).
The above figure shows the flow of money from consumers to the firms to services and back to consumers. So to maintain this flow in an efficient way, government needs to design policies which enables consumers to spend in the market helping it to survive.
A policy change in the taxing structure of tourism industry like hotels can have either good or bad effects to the sector. If the economic policy increases the taxes from hotels, the sector may see a drop in occupancy and thus a subsequent drop in spending (Tribe, 2005). This can also make the hoteliers to consider some lay-offs generating unemployment. On the other hand, if the economic policy introduces a reform of providing tax exemptions to developers of small and budget hotels, the accommodation in budget hotels will go up and also the sector will experience ample addition of rooms by fresh investments. Similarly there are many other economic policy reforms like adding or abandoning value added tax in hotels, taxing higher to tour operators, making cheap finance available for hotel development or tourist site development, can have significant good or bad effects on the entire sector. Local and national policy may also vary sometimes, just like a local policy allowing restaurants to operate for prolonged time to increase revenues against the national policy of closing all restaurants at a fixed time thereby limiting their income. So local and national economic policies tend to have direct and indirect effect on the tourism sector.
Political scenario plays a significant role in steering the growth of the travel and tourism sector. When a country is experiencing elections, the focus is completely on the political parties and their manifesto for the tourism sector. The industry closely watches the political seen and gauges the expected turnaround in the policy reforms which will benefit the sector as a whole. Political leaders promote their individual ideas about each sector and of a leader wins and bringsin changes in the tourism sector by introducing a host of new reforms like complete abandoning of tax exemptions, regulatory changes in sourcing of raw materials from within the country even though importing it might cost low, etc. can actually make the tourism environment a little dull and new investments would not be encouraged. When political unrest increases in Thailand, the number of tourist arrivals from Europe, Japan, and other countries fell down, because tourist did not want to visit places where insecurity was high (Pinjiparakam, 2013). Similarly, when the political condition is smooth and calm, tourist tend to travel more often to such places, because they are assured of their own security and safety. When a good political party takes the governance in its hands, and focuses on building travel infrastructure, increasing airline routes, improving road safety, introducing variety of modes of travel like monorails, metro rail, freeways, etc. and develops tourists sites with the best facilities, the travel and tourism sector is for sure to receive more number of tourists and the entire city or a country improves its image in travel and tourism. This in turn encourages new tourists to consider visiting the country and thus a political change in the leadership with different views about the sector can have immensely positive effects on the sector as a whole.
Travel and tourism starts with the tourist which is the most important element in the industry. If tourist did not seek tourism experiences, and wish to visit far and distant locations, the travel and tourism industry would not be such a big phenomenon it is today (Sharpley, 2006). Demand in travel industry is generated by the demographics of the tourist mix which considers factor such as political stability and tourist safety as major concerns while travelling. Factors like changing work patterns of tourists and their ability to afford holidays or destination stays also play a role in generating or reducing demand. Again the level of disposable income, interest rates which hike up travel costs, the currency exchange rates which also determines the output in a certain location, and the tourists’ personal income and the type of discretionary income they have; these all decides the extent of demand in the travel and tourism sector. If most of these demand indicators are within the grasp of the individual tourist, the demand is reasonably high and countries with sufficient supply side mostly tends to enjoy catering to such demand.
To support this demand that gets generated, it is very important to have a strong supply side which is full equipped with the requirements of the demand. Supply side consists of the accommodation availability, different types of accommodation for different tourists according to their spending habits, the number of tour operator operating in the country of the tourists and having associations with the UK operators, availability of customised products, sufficient quality and adequate service of products being marketed, access to different associated services like retail shops, easier immigration processes, and sustainability in the product designs. With the availability of these supply side facilities, it is possible to meet the demand side requirements.
UK is a culturally strong country and is mostly associated with every single country for its travel offers. Most countries are directly connected to UK and operate tours in the best possible way offering great service and quality tours.
Source: (Visit Britain- Monthly Inbound Update, 2014).
The above chart shows that the number of visits and their respective spends have increased in may this year compared to last year same time. This shows that the UK’s effort in maintaining a politically stable environment and providing the basic services for tourists is being lauded by the visitors and they are accepting the change by showing their likelihood by travelling and spending in the country. The countries budget introducing many policy reforms for the travel sector is helping to attract more tourists as they would have their cost also go down. The country is experiencing good growth by the effort sit has been putting in developing travel infrastructure and growth of business. The country’s business visits have increased by 6% indicating that the business environment in the country is gaining momentum (Visit Britain-Monthly Inbound Update, 2014). North Americans visits remained stagnant, while tourist influx from the rest of the world including Asia went up by 13%. This also indicates the health of the economy and the affordability of tourists to visit the country. So business, economy, economy of other countries are strong factors affecting the travel and tourisms sector in the UK.
Supply side primarily consists of tourism facilities like number of accommodation rooms, tourist spots, events’ to cater to customised demands, travel facilities to hotels and destinations, and the ease of obtaining all government permissions to travel the country. UK has been seeing a steady rise in the number of its hotel rooms with at least about 15,000-20,000 rooms added every year since 2001 (Ons.gov.uk, 2014). However, it is seen that when the market is not supporting ad very difficult to survive similar to the financial recession of 2008-09, many hotels were also converted into residential complexes and sold (Ons.gov.uk, 2014). This is because the cost of operating a hotel is very high and when the demand is dead, the fixed cost are impossible to pay and the owners mostly look for conversion into residential or commercial buildings and give them on rent or sell out. Since the recovery of 2011, again there is a trend of adding investments in the number of hotels and with the entry of institutional investors, the industry is again gaining speed to cater to the rising demand.
According to Jamieson (2011), the UK hotel industry is seeing 100 hotel openings in each year from 2008-2011, and this increase is bearing the fruits right now with a significant rise in the number of business, holiday, and Asian tourists.
In addition to these, UK has introduced a lot of low-cost airlines which have started to fly from different countries breaking the monopoly of individual operators. This addition has tried to set up new norms of demand such as leisure travel. The market understood that it is price sensitive and it needs to offer low cost travel and low cost holidays to further the supply side facilities to capitalise on the generated demand. Moreover, the Internet based bookings and the spread and increase in the reach of internet to new countries has also helped in catering to the demand. The infrastructure uplifting at the Heathrow airport has also encouraged travellers to consider travelling to London and nearby locations.
Besides, government campaigns like Visit Scotland and others have performed very well in attracting visitors from various countries. The investment in the campaign was also supported by the investment by airlines to start new routes which helped them capture new markets. Thus the indicators for a strong supply side is not only increasing number of rooms, but also increasing the infrastructure quality, marketing campaigns, and increasing tourism spots have helped UK to gain an advantage in managing the increased demand that was generated.
Tourism as an industry is a large contributor to the Gross Domestic Product (GDP) of a country. It strives to bring in foreign currency and maintain a sustainable tourism environment so that the tourists are compelled to visit again and explore more. The industry has both positive and negative impacts on economic, environmental, and social elements of the country. For example, considering economic impact, tourism helps in generating employment directly. Also the associated sectors like hotels, service industry, tour operators, also experiences employment rate, because an increase in hotel development will also increase employment in the raw material providers, construction industry, etc. It helps in increasing government revenues, the overall economic growth contributing to the GDP which in turn helps the government to invest in the infrastructure provisions.
Environmentally, it helps in maintaining and conserving natural resources and natural tourist spots which otherwise would be in ruins. The tourist awareness of being an environmentally concerned traveller also enhances, and the historical and cultural sites remain secured and safe as a result of it being a tourist attraction and regular maintenance(Briassoulis and Straaten, 2000). When a country receives an environmentally concerned country, it tends to pass on the feelings to other countries directly or through their travel community which demands such changes.
Socially, tourism helps in making tourists aware of different cultures and a cross culture mixed community learns to live in harmony with each other by respecting everyone’s religious and cultural differences. The socially deprived gets attention through the social programs of many tourism companies and increase in employee requirements tends to employ rural population providing them with a source of living.
On the negative side, countries could learn to depend more on a single industry for their revenues. So much travel can create a rise in inflation and cross currency fluctuations. There could also be a leakage of resources by tourism operators who do not follow the code of conduct. There could be a significant rise in risk exposure with currency fluctuations adding problems to the institutional market and their likelihood of investments.
Environment can become more polluted because of irresponsible tourists, in addition to damage to natural and heritage sites, threat to wildlife, unnecessary use of water creating scarcity, increase in waste generation and disposal, etc. Increased use of vehicles and fuel could increase pollution level which the city will have to bear on a long term. With so much rush and huge influx of tourists, tourism which must be environmentally compatible (Holloway et.al, 2009) loses its edge and becomes a mere commodity to be used for the prime purpose of enhancing business interests.
Socially, tourism can hurt the employees most as the entire industry could only become a means of earning financial reward. Increased commodification of tourism products can hurt social values and the entire purpose of tourism can change with no focus on quality and service (Unep.org, 2014).
Maximising positive impacts can be achieved by forming a framework of operation which allows everyone to participate and collectively enhance each other’s businesses. It is very much achievable when one business helps other business by way of transferring some business to it of tourists that it receives. Collaborative approach of tourism businesses works well as it consistently deals with constructive progress rather than eating others resources and business. Again by keeping penalties for tourists who seem to spoil destinations and important sites can also reduce the negative effect from travellers. Spreading awareness about the importance of the site before tourists’ entry can make them alert of their behaviour inside the site. Proper accountability of the business transactions happening between the service providers and customers helps in non-leakage of sensitive information.
Environmental concerned tourists can be rewarded for their behaviour in front of other audience who are not so concerned (Holden, 2003). This can create a healthy competition and promote responsible travelling even among the unconcerned ones. Policy reforms can be brought about which rewards tourism operators, hotels who uses electricity from renewable sources. This can create an environmentally concerned image for the business also. Social cohesive policies which reserves certain fix seats for disabled employees can really improve the social status of the country. If tourists also come to know of such activities, they will not hesitate to spend more because of their knowledge that part of their spend will go to the disabled and disadvantaged.
Proper allocation of debt and avoiding to lend credit to unworthy business can reduce the failures in businesses of tourism and also save the country precious money. By matching to the tourist spend of other countries, it is possible to maintain a healthy cash flow for the government and more money will stay inside the country and not got out of it. Besides, opening up foreign direct investment in to tourism products can help gain foreign currency and also addition of tourism products and businesses. Thus there are several ways in which the negative impacts of tourism can be stayed and reduced by maximising positive impacts of tourism.
It is seen that travel and tourism sector is a great industry with many small businesses and individual associates supporting each other, and maintaining the industry as a whole. Though it is a large contributor to the country’s progress, it is also affected by external factors like economic conditions, environmental situations, and socio-cultural values of tourists. It is also affected by travel demand and supply side of the industry, but if properly maintained the industry can survive and create huge employment on a consistent basis.
However, it is recommended that this research is again repeated as the global scenario always keeps on changing and this alters the strategy of tourism products and destination management strategies. A further research is necessary to keep up to date information about the latest trends in the industry and the new factors affecting the industry.
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