Delivery in day(s): 5
Unit 6 Issues in Travel and Tourism Industry Assignment
The issues in ttravel and tourism industry brief on the different areas in the travel and tourism industry. Travel and tourism industry is one of the significant industry where the direct contribution which includes the hotel, accommodation, transportation is valued was 2.36 trillion $ and overall it is valued around 7.6 trillion $ at the end of the year 2015. But the increasing terrorist activities, political unrest are affecting the tourism significantly and hence the economy of the state is also unfavourable. Independent travelers are increasing and for that separate strategy is needed to be developed. This travelers are well educated and have enough knowledge to select their plans without the help of the tour operators. Thus there are several aspects which will be discussed in this report.
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.
The sector travel and tourism is one of the largest and effective sector for the economy of the country. As per the data of the market research, this sector is valued around 7.6 trillion $ at the end of the year 2015. The direct contribution which includes the hotel, accommodation, transportation was around 2.36 trillion $ (Page, 2012). The countries are focusing on the betterment of the infrastructure and other facilities to increase the number of tourist. But there are certain issues which are influencing the changes in the travel and tourism sector for example if the Government impose more taxes then it will rise the operational cost for the companies and the price for providing the services to the people will also increase. The demand of the service can be affected. If the country faces the political unrest situation continuously then it will also hampers the tourist arrivals and in turn the economy of the country will slow down. The low cost transport system, supportive measures of the Government can increase the tourist arrivals.
Economic factors:The negative trend in the economic growth of UK can be witnessed. In the year 2014 to 2015 there was a slow down around 2% and after the EU referendum the negative trend continues. The market research is saying that it will decrease around 1.6% at the end of the year 2016 and 0.6% in the year 2017. The reason is the uncertainty that has evolved after the Brexit vote. The spending of the consumers will also continue to decline around 1.3% and it will continue (PWC, 2016). The increase in the VAT up to 20% influences the operating cost of the accommodation, hotels, transport which are negatively creating impact on the travel and tourism sector in UK. But the improve shows in the inflation rate that is around 0.3% from 0.5%. The positive inflation rate will attract the tourism towards UK.
Transportation:The development of the transportation is one of the issues that are driving the changes in the travel and tourism sector. The cornet airlines are now replaced with the advanced Boeing 777. The airlines like Ryan air, Easy jet are attracting the travelers in UK with a key feature that is low cost which supports the travelers to meet their requirements as per their budget. No extra charges will be required to pay for the travelers if they changes their flights before 40 minutes. Railway networks connectivity like from Manchester to London that takes maximum 2 hours which saves times for the travelers and they can plan for other trips. The other factor is the privatization in the transport which doubles the capacity of the transport system and supports the tourism to greater extent. The private organization like Virgin plays a major role in this area. Thus the changing nature of the transport influences the travel and tourism sector by increasing the chances of the tourist to plan their trips effectively which is the positive side for the tourism.
Security: Security of the country is one of the main issues that is highly related with the travel and tourism sector. The growing terrorist activities which has been observed in the country France will affect the tourism sector. The people across the world plan their trips to spend some quality time and for this activities the tourism sectors shows a decline. But the Government of UK has undertaken certain measures like increase in the security across the mosques and other premises. The non-Governmental organizations are in a constant watch to stop the funding to the terrorists which are the positive initiative by the Government to counter the terrorism and establishes a secure environment for the tourists in UK (Dominiczak and Prince, 2015). The positive initiative by the Government will increase the motivation level of the tourist across the world but at the same time the growing terrorist activities which are taking innocent lives are also negatively affecting the world tourism sector.
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. Terrorism, political unrest, financial crisis, violent situations have declined the tourism industry in the Middle East part of the world. With this incidents the rate of the unemployment, inflation and tourist arrivals have been reduced tremendously in the countries of the Middle East, Tunisia, Egypt, Turkey etc.
Egypt and the other country Syria was the popular destinations for the tourism. But the recent political unrests, terrorist activities have declined the tourism around 80%. Very recently we have observed in Tunisia that a boy was set fire on himself to show a protest against the Government (BBC, 2015). A tourist set their trips for spending their quality time and they will avoid this incidents by selecting other destinations which are affecting the tourism of a country to a greater extent. Ansar Bayt Al-Maqdis (ABM) and Ajnad Misr are the attacking the Government of Egypt by creating an unfavourable condition in the country that prevents the tourism to flourish in the country. The origin of the terrorism is in Syria by the ISIS groups but they are organising the terrorism activities in several parts of the world which are damaging the tourism sector (BBC, 2015).
To counter the terrorism the Middle East countries have implemented 1540 which will safeguard the country against the proliferation of the chemical and nuclear weapons. The resolution of 1540 also includes the illicit trafficking. The countries like Egypt, strict legislations have been amended to take a strong action against the Jihadist Groups. The NGO’s or any individual funding the terrorist groups are given importance in the legislation where the punishments like having an imprisonment around 25 years will be applied. Hacking the websites of the Government will also consider as a serious cybercrimes which are having 7 years imprisonment and high penalties. Based on the international level UN council has set up a committee to take care of the anti-terrorism activities with the name of Counter-Terrorism Activities (UN, 2016).
3.1 Analyse how International Airlines Group businesses could respond to change.
The change is the inevitable phenomenon and to tackle the change the business organizations are adopting the strategies which will support the organization to accept the change and give best possible result. The flexible organizations can only adopt the measures to drive the change. The changing business models can be witnessed in this perspectives. The airlines like British airways, Iberia, Aer Lingus are the subsidiaries of the International Airlines Groups. The partnerships in the air networks covering Asia, America will influence the number of passengers. Partnership of Eithad with Virgin will increase the service areas which includes 45 places in New Zealand, Australia and few areas in Latin America. Smaller jets are given focus to meet the needs of the passengers who are travelling for the business purposes. The strategy for long haul operations of Iberia stands to be an effective approach to measure the performances in the terms of per unit of the passengers. But the negative side is the growing terrorist activities which has decreased the revenue of the airlines companies around 4.7% and that is around 1.8 million pounds. But to attract more passengers Iberia has planned to operate 172 flights within Spain and Latin America which will increase the service area around 17 destinations (CAPA, 2012). The effective staffs as a cabin crew are being selected to give effective services to the passengers. The management understand that it is the air transport which will allow the passengers to visit their favourite destinations and for that giving world class services is the only objective for IAG. They are paying a high remuneration to the international cabin crew to manage the international passengers very effectively. At the end of the quarter of 2015 the operational profit shows an increase of 64%. Though per unit income from the passengers have decreased due to the violent activities of the terrorist to all parts of the world. The hub of the British Airways that is Heathrow is considered to be the potential market in the aviation industry. The proportion of the premium passengers are significant and for that 17% of the seats in the airport falls under the category of premium rooms. The management of IAG is very flexible and considered their restructuring policy as a success factor in the aviation industry (Molz, 2012).
3.2 Develop strategies on how IAG services like BA, Iberia, Vueling and Aer Lingus could respond to change. Develop strategies for at least 2 businesses. Provide detailed explanation of strategies.
The route between Latin America and Europe is one of the important routes where the primary carriers like Iberia is much popular. The competitors are also less in this route except Air France. But the low cost carriers or the high speed railway networks are creating influence to the aviation industry. The labour disputes which are observed in Spain has created a negative influence in the business operations of Iberia which are giving advantage to the competitors and resulting to the operating loss to the company. Thus a business strategy is needed to be developed which will bring added advantage to Iberia in the terms of revenue per passengers and also to beat the rivals. The strategies are as follows:
- The routes which have less demand or not profitable then the management of Iberia can reduce the number of the aircrafts to maintain a balance or break even
- Expenses are needed to be identified and have to be reduced for achieving the profitability. The expenses can be the extra facilities given by the organisation to attract more passengers. Unproductive expenses is needed to be stopped (Grundy and Moxon, 2013)
- The routes which are more profitable and have more demand must be given emphasis.
Another organisation is the British Airways who are creating a wide differences in the long haul operations by satisfying the passengers effectively. The management of British Airways are very much conscious and aware of the passenger’s amenities or profitability of the business. Continuous changes in the operations for making best service provider is the approach of British Airways. The strategies they can adopt are as follows:
- It is the passengers who are the revenue drivers of the organisation British Airways and for that priority planning is needed for identifying the gaps between the passenger’s expectation and the service provided by the British Airways (Veal, 2011)
- It has been observed that in some routes the fare charts is not proper in relation with the distance. Thus the management needs to identify those routes and implement a fair rate chart to satisfy the passengers
- The employees of British Airways are diverse in their cultural background in order to satisfy all types of the passengers. It is the duty of the management to develop an effective training modules for all the staffs of British Airways to give their best services to the passengers.
- The strategies will add benefits to the organisation Iberia and British Airways to attract more passengers and to sort out the routes which are most profitable
3.3 Justify strategies for how selected International Airlines Businesses could respond to change. Strategies in 3.2 needs to be clearly justified with supporting arguments.
The strategies that has been undertaken for the International Air Businesses are focus to the profitability of the business. Iberia is a carrier which is very much popular in the routes from Latin America to Spain. But the arrivals of the low cost carriers, high speed railway networks are giving wide challenges to Iberia. Adding to this the labour disputes in Spain has created a major influence to the management of Iberia. The demand will be fall down if this scenario continues and will bring losses to Iberia. Thus the first strategy to identify the non-profitable routes is required. This will help the management to cut their cost by reducing the number of flights. The first and foremost step will reduce the operational cost and help the organisation to achieve the break even. The second strategy to reduce the passenger’s amenities cost which are unproductive in nature. The unnecessary cost or expenses should be controlled in order to move the business towards the profitability. The expenses are mainly focused towards the passengers in order to attract but at this time it is important to control or reduce the cost to achieve the profitability. The third strategy is the emphasis to the profitable routes. Profitable routes can only assist the business to achieve more profitability and for that the management needs to identify and give more focus in this area to attract more passengers. In case of British Airways the management is very conscious and implement certain changes in the passenger’s facilities to continue the leading position in the aviation industry of Europe (Punzel, 2013). The first strategy to understand the customer’s requirement will help the management to understand the deficiency towards their services. Meeting the requirements will help the organisation to attract more passengers if they fulfill those gaps. It will help them to retain their leading position. The second strategy is to set a fair price based on the distance. The passengers are paying their fares in exchange of the value that the organisation is providing. In this case setting the fair prices will help the passengers to consider British Airways as their journey partner. The third strategy is the development of the training modules for the employees at British Airways. The passengers are from the diverse background and to satisfy them with the service it is the only the employees. Thus proper training can make them effective and efficient in providing services. The quality service can only influence the passengers to select their flights and for that training is needed. Thus the strategies will increase the productivity and efficiency of the employees in the international airlines business.
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.
In Travel and tourism sector, the tour operators like Myla Travel, Thomas Cook, Travel Network Group plays a major role to attract the people with their holiday packages. But the current trends and issues are influencing the management of this tour operators with their impact in the following way:
- International events can be the issues or trends which are driving the change in the travel and tourism sector. People who are fond of the sports will wait for the years to participate in the international events like Olympic, Football etc. For example Brazil is organizing Rio Olympic which will attract several spectators around the world and for that the tour operators will plan their packages to attract those people who are fond of the sports.
- The fluctuation of the currency create a negative impact in the travel and tourism sector. When there is a depreciation of the pounds against the dollars, there is a tendency of the people of UK to postpone their trips which in turn bring losses to the tour operators (Fawcett, 2013).
- Security is the main issue where the travelers considered this issue while planning their trips. The terrorist attacks in France, Belgium create a negative impact in the mind of the people and lastly the political unrest which are now observed in the places like Turkey, Greece where the tourism has been declined around 80% (Evans and Campbell, 2013). This is one of the major issue or the trend that are affecting the business of the tour operators.
- Weather or the climatic conditions are also the factor that damages the businesses of the tour operation. This is one of the unpredictable circumstances which influence the business towards losses. Dull weather is the main rival of the tourism sector. To overcome this situations we have observed that in summer seasons the exams are being conducted in UK.
- Foreign affairs or the policies designed by the Government is the another issues which can influence the tourism. For example simplification of the process regarding the VISA for china by UK will attract the business of the tour operators. Apart from that the integrated approach by the Government with the local and national bodies help the tourism to grow which in turn facilitate the business of the tour operators
- Developed transportation also plays a major role. The low cost carriers like Ryan Air, Easy jet is attracting mass population towards them. The privatization in the transport system in the countries like UK developed the transportation and help the tour operators to plan their trips effectively.
- The negative trend in the economic growth of UK can be witnessed. In the year 2014 to 2015 there was a slow down around 2% and after the EU referendum the negative trend continues. The market research is saying that it will decrease around 1.6% at the end of the year 2016 and 0.6% in the year 2017. The reason is the uncertainty that has evolved after the Brexit vote. The spending of the consumers will also continue to decline around 1.3% and it will continue (PWC, 2016). The negative trends in UK economy has created a negative impact in the tourism sector and influence the management to undertake remedies to develop the business of the tour operators.
From the market research it has been observed that there is a rise in the group called Millennial mainly consist of the people who are the early professionals. By the year 2020, it has been predicted that around 47% of the market share of the travel and tourism will be from this group. This group of people are well aware of the techniques and process to plan their trips. In this circumstances the management of the tour operators needs to target them separately with effective plans to attract them.
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.
Travel and Tourism market is not stable and the businesses like Myla Travel, Thomas Cook, Travel Network Group needs to identify the changes and adopt them in their strategy to remain in the competitive market of travel and tourism. The consequences will be positive if the businesses have identified the required change that the market is having. The various example can help to analyses the consequences in the following way:
- It is the internet where the people all over the world used to share their reviews or experiences regarding any trips or holiday packages of the tour operators. This feedbacks are necessary to collect in order to identify the issues that the travelers are facing. In UK almost 90% of the people are using the internet and for that the management of the business houses have to collect the reviews from the internet for incorporating the measures in their service portfolio. Otherwise the sales can fall down due to the several opportunities or alternatives that the people have to select their plan.
- Independent travelers are increasing and for that separate strategy is needed to be developed. This travelers are well educated and have enough knowledge to select their plans without the help of the tour operators (Conrady and Buck, 2011). For them customization of the services is needed to be framed for attracting them towards the business. It has to be remembered that this travelers prefers to plan their trips as per their wishes and for that reason customization is needed to attract them which will help the business to grow.
- Changing taste and preference is another factor that are driving the change in the tourism sector. The niche markets are getting preferred by the travelers while selecting their trips. For example, a traveler will only select the package which has the heritage part of the tourism. This implies that heritage tourism is the only choice for that tourist. Thus the tour operators needs to develop the niche tourism packages to attract the guest. Not only the heritage tourism there can be other niche packages like medical tourism, green tourism, food tourism etc. This niche markets will help the business to attract more customers
- Pricing is another issues or trends where the tour operators needs to review the prices of the packages systematically. The visitors will only satisfy if the price of the packages meets the requirements of the visitors or the value promised by the tour operators in the specified price. Periodically the management need to compare the prices with other competitors to keep themselves in the competitive market otherwise it will be difficult for the organisations to sustain in the long run.
To conclude this report has significantly shows different dimensions of the travel and tourism sector. The report has highlighted different issues that the travel and tourism sector is witnessing. The strategy that has been developed for the international airlines business will help them to grow their business and make them more focus to the profitable routes. Terrorism and security measures are also highlighted in this report. Independent travelers and the Millennial are increasing and for that separate strategy is needed to be developed. This travelers are well educated and have enough knowledge to select their plans without the help of the tour operators. Thus there are several aspects which will be discussed in this report.
BBC. (2015). Egypt’s Al Sisi imposes strict anti-terrorism laws. [Online]. Available at: http://www.bbc.com/news/world-middle-east-33955894, Accessed as on 26.7.16
BBC. (2015). Egypt’s Al Sisi imposes strict anti-terrorism laws. [Online]. Available at: http://www.bbc.com/news/world-middle-east-33955894, Accessed as on 27.7.16
CAPA (2016). IAG tells Iberia to prepare for a chang
Conrady., R and Buck., M. (2011). Trends and Issues in Global Business Tourism 2011. Springer Publishing.
Dominiczak., P and Prince., R. (2015). David Cameron to fast track tough anti-terror laws. [Online] Available: http://www.telegraph.co.uk/news/uknews/terrorism-in-the-uk/11600927/David-Cameron-to-fast-track-tough-anti-terror-laws.html, Accessed as on 26.7.16
Evans., N and Campbell., D. (2013). Strategic management for Travel and Tourism. Routledge
Fawcett, L (2013). International Relations of the Middle East. OUP Oxford.
Grundy, M. and Moxon, R., (2013). The effectiveness of airline crisis management on brand protection: A case study of British Airways. Journal of Air Transport Management, 28, pp.55-61.
Molz, J.G., (2012). Travel connections: Tourism, technology, and togetherness in a mobile world. Routledge.
Page, S (2012), Tourism Management, Routledge.
Punzel, T (2013), Risks and Decision Making, GRIN Verlag.
PWC. (2016). Economic Prospects after Brexit. [Online] Available: http://www.pwc.co.uk/services/economics-policy/insights/uk-economic-outlook.html, Accessed as on 26.7.16
UN. (2016). UNITED NATIONS ACTION TO COUNTER TERRORISM. [Online] Available: http://www.un.org/en/counterterrorism/, Accessed as on 26.7.16