Delivery in day(s): 5
Unit 6 Aspect of Contemporary Issues in Travel and Tourism Assignment
The Aspect of contemporary issues in travel and tourism that will assist in the development of the skills associated with research within the framework of travel and tourism. By investigating the current issues and trends in the travel and tourism sector, there will be the development of the understanding in what ways are the travel and tourism sector is responding to change as well as the influence of change.
1.1 Analyse issues currently driving change in the travel and tourism sector for a selected tourist destination. You have to include at least three issues and give detailed explanation of the issue and its impact on the travel and tourism sector.
There are different issues which are related to the travel and tourism. These factors or issues are currently driving different changes within the industry. The UK has been chosen for illustrating the issues. It is one of most popular destination among other destinations within Europe. These place it the most popular destination within the cultural tourism. Through the rich culture and heritage the destination has been branded itself within the global market of tourism. This has been impacting over the economic scale and GDP of the destination. Through the improvements and the enhancements of the existing features of tourism the destination has been enhancing their approaches in the current tourism demand. (Horner, 2012).
There are different factors and issues which are imposing changes within the travel and tourism sector. These factors and issues are:
Technological issues:along with the globalisation the issues over the technologies has been increasing within the travel and tourism business. The tourism business has been impacted by the changes within the technologies. Through the technological improvements different activities within the travel and tourism business of UK has been impacted heavily through the modification of the technological implementations. (Horner, 2012). The increase adaptations of these technologies are influencing the information and knowledge sharing within the business through the technological implementations the social interactions within different cultures is impacted heavily. The technological improvements are also impacted over the lifestyles of the travellers as well as their purchasing behaviours. Through the technological implementations like e-commerce the travel and tourism business within UK destination are trying to adapt the customer oriented approaches. Through the technological influences and adaptation the communication can be enhanced. Through the technological modification sand implementations of them within the business the business of travel and tourism can be able to approach the travellers from different destinations with cost effective way. (Horner, 2012).
Political changes: the changes within the political environment impact over the travel and tourism business. Different political unrest has been impacting over the destinations. In recent context the Brexit of UK from Europe Union is impacting over the economical causes and travel expenses. Political stress and conflicts within the changes in the politics or political parties has been influencing the business of travel and tourism. (Horner, 2012).
Economical issues: with the changes in the exchange rates, global economic scale, unemployment rates, fluctuation in the trade rates, interest rates etc are the emerging economical issues for the travel and tourism business. In the recent scenario the exit of Britain from Europe has been greatly impacting over the currency rates of the destination which is directly influencing the travel and tourism, business over the destination. The economical changes impacts over the business strategies of travel and tourism business along with the purchase decisions of the travellers. Indirectly it also impact over the services industries and hospitality sector of the destination. (Horner, 2012).
Health issues: as the global travel has been dramatically evolved during past decades the health issues and concerns over these issues during travelling are also evolving with escalating speed. Specific infectious diseases are involved within the potential health risks for the travellers. The outbreak of SARS in the year of 2003 is the example of the spatial mobility and the active role of the travellers. Another outbreak can be taken in account while an infected physician with coronavirus of respiratory infections stayed in a hotel of Hong Kong and became the source of the infections of multiple hotel guests from different countries. These guests disseminated the virus in returning their home. As a result by May 2002 more than 8000 SARS infections have been reported by WHO. Apart from these incidents the outbreak of influenza, dengue, Ebola in 2014 etc are also caused by the travel movements. These incidents are leading to the rising health issues within the travel and tourism. (Baker, 2015)
Terrorism issues: in past years the terrorism activities are imposing direct threats to the travel an tourism business. The suicide bombers and the terrorists are targeting different areas which are associated with the travel and tourism. Attacks in the commercial areas of Jakarta, Tunisia, tragedies in Turkey, Pakistan, Paris, Brussels, Ivory Coast etc are imposing terrorism concerns over the travel and tourism business. The increase of these attacks is discouraging the travellers in having a trip to other destinations. These incidents are also raising the debts over the security and safety in another destination. (LaGrave, 2016)
1.2 You should analyse at least two different current issues using appropriate methods and resources in depth focusing mainly on the impact of political unrest in the Middle East and North Africa, terrorism and counter-terrorism measures, severe weather, local and international laws.
Two different issues are currently impacting over the tourism business within the North Africa and Middle East. These destinations have the potentialities in attracting tourists and increase the growth of the travel and tourism business. The political unrest within these destinations is impacting over the reputation as tourism destination. These political issues are de-motivating the travellers in visiting the destinations by creating fear among the travellers. The political unrest is causing hurdles within the travel and tourism business. Protest with continuous manner has been increasing the unwillingness within the mind of travellers in choosing the destinations. The local riots, financial crisis, increasing unemployment rates, are causing the political issues within the destinations like Egypt, Syria, Tunisia etc. increasing crimes within the destinations and tourists spots of Egypt has been decreasing the tourism arrivals in the recent years with great measures. (state.gov., 2014)
The business of travel and tourism in the destinations like Tunisia and Egypt has been facing hurdles for terrorism attacks and political riots. Though these destinations has the potentialities in attracting the travellers and increasing the revenue generation from the tourism business the increasing riots and political issues are decreasing the tourists arrivals which is approx 80% down than previous years. (Shah, 2016) In the year of 2010 a 26 year old vendor had set himself on fire in the protests. This increased the strength of the protests and keeping the local authorities within pressure. Later the fuming public had exiled a directorship in the street. These incidents are impacting over the image of eth destinations and creating a negative impact over the destination. With the globalisation impact over the life styles the travellers are getting the information of these issues. As a result the travellers are avoiding these destinations in greater number. Current political issues within the local distress along with the Civil War in the Syria are increasing the refugee crisis. These are imposing negative image over the destinations in Middle East. (Shah, 2016)
Counter terrorism activities are other issues in these destinations. The counter terrorism activities are conducted against the terrorism actions. The increasing activities and existences of the Islamic ISIL are bringing the terrorism impact over these destinations. The increasing terrorism activities are challenging the safety of the travellers within these areas. In order to control the ongoing terrorism attack regarding Syria and Egypt the counter terrorism activities are developed by the government. (Shah, 2016) These activities and the counter terrorism contract law imposed by Egypt government has been decreasing the wiliness to travel and in return considerably lowering the tourists arrivals in both inbound and outbound tourism. The legal actions of the government of these destinations are making the access to these destinations more difficult. Along with the legal issues the travel and tourism are also impacted by the security measures considering these destinations and the perceptions of the tourists about these destinations.
3.1 Analyse how International Airlines Group businesses could respond to change.
Changes are the common issues within the travel and tourism business as well as in the subsectors which are attached with the hospitability and service sectors. The international airlines groups need the proper structure within the business and services. The international airline Group is the Spanish British multinational airline holding organisation which has been registered within Spain, Madrid, England, UK. Six Major airline companies like British Airways, Iberia etc are attached within the group. (Evans and Campbell, 2013)
In recent consent the airlines group has been facing different challenges along with the changes in the environment of the business. Certain strategies like better alliances are needed to approach the changes in the current market situation. Different exchange rates, technological implementation, emerging changes in the customer preferences, increase of lower rate carriers are influencing the business of the Airline Group. (Evans and Campbell, 2013) Through alliances with the other airline groups will be profitable for the IAG in order to attract more potential tourists or travellers from regions like Asia. With the partnership with the Virgin Australia were profitable as it provided the access different destinations like Latin America, Africa, New Zealand. The access to more networks is needed for approaching more passengers. By approaching the emerging markets like China, Korea and India and also the developing destinations the airlines will be able to increase the customer base. The emerging destinations like France, Belgium are increasing the demand over the airline travels within Europe. (Evans and Campbell, 2013)
SWOT analysis on the internal and external factors of International Airlines Groups:
It has been holding the company structure though holding the merger. While the group has been considering the potential synergies between the two companies the structure has been allowing the Airlines to operate separately. This approach is the major strengths as it helps them to avoid the bias while keeping the acquisition. In the North Atlantic the group has been placed itself in the leading position by seats with a seat market share of 14% at the start of summer 2015 schedule. With a share of 38% seats BA has gains a clear lead over Virgin Atlantic.
- IAG has made greater progress with restructuring the labours
- It has placed itself in the better position in LCC segment than Air-France KLM or Lufthansa
- IAG has intrinsic strengths over the brand business strategy. (Evans and Campbell, 2013)
- IAG does not achieve sufficient ROIC or return on invested capital. In 2016-20
- BA has been considerably placed itself as higher cost airlines and measured as the cost per available seat kilometre.
- IAG has been relatively small in Asia Pacific (Evans and Campbell, 2013)
- Expansion in the Asia Pacific has been considerably upside
- Further airlines acquisition also helpful such as deal with the Big Three legacy would be efficient
- The closer integration between the merged airlines will lead to the savings
- The growing competition within the LCC on short haul has been posing potential threats for BA and Iberia. (Evans and Campbell, 2013)
- Ryanair and Easyjet have been placing competition for Iberia and BA.
- Competition in the long haul markets from the Big three gulf carriers Emirates, Etihad and Qatar Airways
- Political factors: Political impacts are imposing threats over the airlines approaches. The political changes and the current government legislations over the business activities of the airlines have been influencing the business. The increasing issues over the carbon footprint and the government legislations in the security systems in the airlines business are also impacting the expansion strategies. (Evans and Campbell, 2013)
- Economical factors: high taxation and the recession have been affecting the business of BA and Iberia. The rising prices in the global market are also impacting over the rise in the fuel.
- Social factors: Considering the current lifestyle and the trends within them are the necessary ones to analyse before making approaches in the global market. Emerging demands over the airline transport in leisure perspectives as well as in business reasons should be evaluated by the Airlines Groups in order to have increased customer base. (Evans and Campbell, 2013)
- Technological factors: innovation within the technological world helps the IAG to reduce costs and making better approaches in the competitive markets. E-commerce system implementations, booking through online, use of better equipments in the flights, self service checking machines etc are improving the services of IAG.
- Legal factors: IAG has been facing different legal factors within their business such as safety regulations, terrorism attacks and their impacts on the legal frameworks of government. (Evans and Campbell, 2013)
- Environmental factors: the reputation of BA has been impacted by the approaches of green movements. Apart from it carbon emission, discharge of waste are impacting over the image of IAG. The group has to follow the environmental regulations.
3.2 Develop strategies on how International Airlines Group businesses such as British Airways, Iberia, Vueling and Aer Lingus could respond to change.
British Airlines has been considered as the success airlines business within the Europe. Through the value added services the business group is having positive advantages over the market competition. The British Airways has to analyse the current trends and business perspectives for enhancing their capabilities. Different strategies and techniques must be adopted by the British Airways in considering the current market trends. The demands over the long haul and short haul travellers should be analysed before placing the strategies. The current demands over the lower cost carriers should be evaluated. Through availing the lower cost carriers the Airlines Group will be able to generate more mass tourists. The cheap cost of long haul as well as haul travels should adapted within the approaches. Through alliances with other airlines will also be needed by BA for expanding their market approaches. (CAPA, 2016) Alliances with Vueling and Aer Lingus will lead to the access of different destinations and profitable business through approaching potential tourists and passengers. These alliances are helpful for imposing positive impacts over the minds of the travellers and the forthcoming customers. Including the lower cost airlines within the services are needed for responding to the current market demands.
Iberia Airlines has been a leading Airline group within the American Market and European Union. Analysing the current market demands and the emerging rivals the organisation has to take different strategies for approaching the market through proper approach and successful measures. It has been currently providing wide range of discounts and offers over different travels like business and leisure travels. The currently leading Airlines groups and their profitable discounts and the development of the transportation system in the destinations by the government are imposing loss in targeting the inbound markets of destinations. (CAPA, 2016) Providing services to the profitable routes will be necessary for the Airline Groups in order to have the considering the approaches of the competitors’ proper discounts and their promotions through different profitable media are needed in order to have better implementation of the strategies. Analysis over the current and future trends would be needed for the having proper knowledge over the different perspectives of travellers in choosing the packages and transportations. Apart from the current target market of travellers the Airlines groups should also attract the business passengers with value added services. Training to the human resources is essential for adapting the changes by analysing the demand and supply over the market. (CAPA, 2016)
Marketing mix strategy for responding the changes:
- Product: the products which have been offered by IAG are efficient to satisfy the needs of the customers. The Airline Group should add more values within the services through adding different facilities like loyalty, lounges etc. through enhanced services the aircrafts can be able to attract more potential passengers who can be able to spend more.
- Prices:apart from BA other mergers in IAG have been setting proper pricing policy to attract different potential customers. In order to attract customers in greater number Iberia has been providing different discounts. In order to target the LCC segments with better approaches the Airlines should place efficient pricing policy for attracting people who require certain fringe benefits. (CAPA, 2016)
- Place: IAG has placed their services efficiently in different potential areas through acquisition and merger. Through approaching potential routes in different countries such as in Asian countries and in Australia IAG can expand the network. the channel of the distribution of the services of IAG is online websites and tour operators. Apart from these IAG airlines has to place different technologies for smooth transaction and better customer experience.
- Promotion: different innovative approaches are taken in by BA and Iberia. Apart from these special promotional strategies should be taken in by other airlines based on peak season and off season time. (CAPA, 2016)
3.3 Justify strategies for how selected International Airlines businesses could respond to change.
British Airways has been considered as the finest airways along with better system in the approaches. The organisation for maintaining their position within the competitive market should implement the strategies with proper evaluation. Considering the marketing mix strategies, as the BA has been placing better services with added values the quality of the services are providing higher position than the competitors. (Grundy, and Moxon, 2013).
The lower price can be impactful over the demands of potential customers. As the Airline is targeting the high class passengers, dropping the price will create a negative impact over their mind which can lead to the loss. On the other hand lower prices will lead to the target of mass travellers of middle class. . Certain discounts for the inbound market will lead to more revenue generation. (Grundy, and Moxon, 2013). Through the alliances the British Airways can place their positive image within the global market. Through the alliances and acquisition the airline can able to expand the channel of distribution. Through approaching different routes customer convenient approaches can also be taken. The system regarded with the ticket booking should be considered by enhancing the technologies and the approaches. Through the alliances the organisation can have better access over different tourist destination while having profits along with acquisition. (Grundy, and Moxon, 2013).
Through promotional strategies the organisation can make better approaches within the market. The policies and the legal systems which are measured in the processes are also needed to be maintained for keeping strategies foot through governmental policies. Through promotions more potential markets can be accessed. Considering the countries like America and Spain the airline Iberia has been doing business through proper business strategies. In recent context with the increase demand of the lower cost carriers the business has been facing certain issues. (The guardian., 2016). In order to have better approaches in current situation the organisation should have add more values services. Analysing the current demands and conducting the business strategies as per the demands should be needed for Iberia. Adding values will be necessary to improve the existing services. Attempting different routes with proper specifications over the traffic of potential customers with different purpose for travelling will lead to affordable approach. Different approaches in the promotions like special gifts or prizes on Christmas will attract more customers. (Grundy, and Moxon, 2013).
4.1 Analyse the impacts of issues and trends that drive change in the travel and tourism sector with reference to Myla Travel, Thomas Cook and The Travel Network Group.
The industry for tourism is considered to be one sector which has flourished like anything and it is improving with every passing day. In the past couple of years, a huge growth has been showcased due to the attempts of different travel and tourism agencies that has provided assistance to the travel and tourism sector for growing in respect of well-known travel agencies such as Myla Travel, Thomas Cook and The Travel Network Group, which are considered to be the major tour operators who are helping the travel and tourism industry to grow in leaps and bounds.
The impacts of issues and trends that drive change in the travel and tourism sector are analysed as under,
Technological issues – The aspect of technology is considered to be one of the most important scenarios that along with providing assistance individuals for getting connected with each other at a domestic and national level, also provides an international platform for each and every individual. According to a research study conducted by Thomas Cook, it was found out that, in the present scenario, everyone is using the internet and is also using the mobile phones to have an ease of getting connected anytime and anywhere. 75% of the individuals are using the computer as well as the internet is being used by approx. 70% of the individuals for searching various types of destinations. This strongly affirms the fact that, a pivotal role is being played by the aspect of technology. For instance, a couple planning their trip to UK from a small town of Canada can easily do it with the click of a button, with the assistance of wi-fi and mobile internet services, which has helped in increasing the accessibility to search and book their holiday trip. (Iqbal, 2011) The aspect of technology has also assisted in ‘online check-in’, ‘online booking’, ‘online ticketing’ as well as ‘facilities for online food and beverage’ and so on.
Employment issues – With the constantly developing rules and responsibility that is being inhibited by the travel and tourism sector, an increasing number of individuals are having the inclination for travelling throughout the world. More mobility is occurring among individuals, so more individuals are getting attracted for joining the travel and tourism sector provided that they should be possessing appropriate skills, appropriate ethical knowledge, and appropriate inter-personal skills. The tour operators like The Travel Network as well as Thomas Cook does the recruitment of such individuals who possess the requisite skills for assisting in the creation of overall benefit for the company as well as themselves. (Iqbal, 2011)
Holiday trends –Different individuals are putting more focus on long duration as well as short duration holidays. Different individuals are having varied perceptions in respect of travelling. The tour operators such as Myla Travel, The Travel Network and Thomas Cook are giving more emphasis on the acknowledgement of various kinds of fashion as well as style that are being undertaken by different individuals. (Jenkins, 2011) The tour operators have concluded that individuals love being with friends as well as families, therefore Thomas Cook has designed a new type of travel package that takes into consideration the family packages, travel packages for elderly people having special facilities, customized honeymoon packages for the newlyweds and as a result, these travel packages as well as schemes are showcasing a positive impact.
Stakeholder issues –It has come under observation that the different airline companies at times are not convinced in respect of a specific destination and as a result they increase their share amount. It is a challenging issue to negotiate with the hotels as because the hotels do not provide enough facilities and as a result the tour agencies are required paying a significant sum of money. Hence, the travel and tourism sector should be depending on various individuals or else it will be quite challenging for them in reaching their objectives.
Country-wise issues – The travel company named Thomas Cook presented the pink slip to staffs from almost 2500 jobs in 2013 because of the crisis situation that occurred in the Euro Zone. In countries such as Spain as well as Greece, where due to the economical instability the travel agencies are facing the heat. (Jenkins, 2011) Also, another major issue is the significant cost that is being incurred in respect of fuel. Therefore, the tour agencies should concentrate on these issues before making a tour plan for a particular destination.
The impacts of change on the travel and tourism sector structure is based on four aspects which are,
- Mergers –A merger is defined as a corporate strategic aspect to combine various organisations into a single organisation for enhancing the financial and functional strengths of both the companies. For instance, Thomas Cook and Co-op have merged together for creating UK’s largest high street travel chain. The newly formed organisation that will be including over 1,200 shops throughout the nation is anticipating to savings of approx. £35m a year by combining the functions of the headquarters as well as back-offices. The impacts of change on sector structure such as merger can lead stress, fear of job loss, as well as competitiveness. (Page, 2012)
- Acquisitions –This is defined as taking custody of records as well as taking possession of an asset by purchase. This is also related with taking control of an organisation through the purchase of 51 percent (or more) of its voting shares. Also, considered as the purchase of one corporation by another, through either purchase of its shares or its assets.
- Liquidations – Liquidation is considered to be an event that normally takes place when a company becomes insolvent which means that it is unable to do the payment of its obligations as and when they come due. The functional aspects of the organisation are brought to an end and the assets are divided amongst the creditors as well as shareholders in accord to the priority of their claims. (Jenkins, 2011)
- Formation of consortia – There is the formation of the most standard setting as well as standards-supporting consortia by people with little or no previous experience to create such entities. For instance, in 1972 Thomas Cook returned to private ownership, bought by a consortium of Midland Bank, Trust House Forte and the Automobile Association
In regard to the case study, the type of change that occurred in Thomas Cook was associated with Merger. Thomas Cook and Co-op have merged together for creating UK’s largest high street travel chain. The newly formed organisation that will be including over 1,200 shops throughout the nation is anticipating to savings of approx. £35m a year by combining the functions of the headquarters as well as back-offices. The impacts of change on businesses are associated with staying current, new opportunities, encouraging innovation, increased efficiency as well as improved attitudes. The influence of the current issues as well as trends that are driving change in the business related with travel, tourism and hospitality can be realised in respect of product and services as well as levels of employment for Thomas Cook.
4.2 Discuss the likely consequences of businesses failing to respond to market change with reference to Myla Travel, Thomas Cook and The Travel Network Group.
The travel and tourism sector in the present scenario is faced with significant losses, crisis situations because of different issues. A recent identification was made by Thomas Cook as well as The Travel Network Group which stated that because of various severe factors that occurred in the present scenario, the tour and travel sector is getting adversely affected. (Page, 2012) The likely consequences of businesses failing to respond to market change with reference to Myla Travel, Thomas Cook as well as The Travel Network Group are discussed as under,
- Reduction in prices – The tour operators such as Thomas Cook, The Travel Network Group, and Myla Travel are the companies that are assembling each and every facility that takes into consideration the aspect of documentation, booking of flight tickets, appropriate facilities for lodging, food, sightseeing and so on, as a result, a huge cost is incurred in this respect but at times for attracting an increased number of customers, the tour companies are doing reduction in process that they are charging and this is considered to be a significant risk as there is a high possibility for incurring major losses.
- Change in climate – This is an issue that cannot be predicted or foretold with absolute precision beforehand and thus, creates a severe impact on the travel and tourism sector. For instance, the Tsunami could not be predicted beforehand and as a result there occurred a significant loss in respect of the travel and tourism sector. (Page, 2012)
- Environment friendly locations –In the present scenario, individuals are giving more emphasis on visiting the environment friendly locations. The well-known tour operator named Thomas Cook is already trying to inculcate such type of initiative in which it offered the aspects such as natural solar power, mixing with the local cultures, staying in peaceful places that are away from the hustle and bustle of the cities, having a better wildlife reserve. (Kozak, 2010) But all these will be requiring significant investments that might incur significant losses for the tour agencies.
Consequences of failing to respond to change are mentioned as under,
- Reduced sales and profitability – There is a reduction in sales as well as profitability for the organisation.
- Profit Margins – The profit margin gets reduced significantly.
- Attitudinal changes– There are changes in attitude in respect of customers, suppliers and also competitors.
- Adverse effect on image – There is a negative influence on the product, service or business related image of the organisation.
Taking into consideration, the current issues that are influencing Thomas Cook it can be stated that the 172 year old group has failed in adapting to changing aspects formed by the current issues and trends in the travel and tourism sector. As a consequence to this the company had to bear a loss of £590 million during 2010 and 2011. The company faced a massive debt of £156 billion. Had to close down 200 high street stores and also cut down 100 managerial positions. It had also axed more than 2000 jobs in UK. This has resulted in the company garnering a bad reputation and also loss of credibility among the consumers. They lost potential clients to the competition from other competitors like SAGA travel. (Kozak, 2010) Moreover, the suppliers avoided for trading with Thomas Cook for avoiding payment because of bankruptcy. Hence, it can be concluded by saying that Thomas Cook failed to notice the new trends related with tourism.
This case study is associated with contemporary issues in travel and tourism where the issues that are currently driving change in the travel and tourism sector are analysed for a chosen tourist destination. Also, two different recent issues are being analysed for using proper methods as well as resources that focuses mainly on the effect of the political turmoil in the Middle East and North Africa. Also, the current trends that influences change in the UK travel and tourism sector has been evaluated. Apart from that, the influence of the factors that are driving change in the travel and tourism sector has been analysed as well as the probable consequences of businesses failing to respond to changes in the market has been discussed.
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