Economics for Managers

Running head: ECONOMICS FOR MANAGERS
Economics for Managers
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1ECONOMICS FOR MANAGERS
Table of Contents
Answer 1....................................................................................................................................2
Answer 2....................................................................................................................................4
Answer a.................................................................................................................................4
Answer b................................................................................................................................6
Answer c.................................................................................................................................6
Answer 3....................................................................................................................................6
Answer 4..................................................................................................................................10
France...................................................................................................................................10
Spain.....................................................................................................................................11
United State..........................................................................................................................11
Recommendation to improve tourism in Australia..............................................................12
References................................................................................................................................13

2ECONOMICS FOR MANAGERS
Answer 1
The article named “Tourism Investment Monitor 2017,” provides a brief overview of
tourism industry in Australia. The tourist attractions and associated economic contribution of
the industry increases investment in the investment. In the year 2016-17, investment projects
in tourism totaled $37.8bn. These investment projects include individual investments initiated
in accommodation, art, recreation and business service and aviation. Of these art, recreation
and business service account for highest valued project with value being $17.0bn.
Several factors influence investment decision of an economy. In a specific industry
investment particularly depends on trend in performance of the sector and future prospective
growth (Goodwin et al. 2015). Tourism in Australia is one of the fastest growing industry.
The increasing flow of visitors in the nation can be seen from growing number of night stay
in hotel and other business service apartment, number of passengers in airlines and aggregate
spending in tourism.
The increase in tourism demand in Australia is accompanied by an increase in supply
and contribute to an expansion of the industry. The industry experienced a considerable
increase in supply since 2010. In the presence of housing crisis resulted from increasing
demand side pressure of houses in capital cities, tourists cannot be accommodated without
increasing supply. If demand exceeds supply then there is an increasing pressure on house
adversely affecting the tourism industry (Agenor and Montiel 2015). The high demand from
international and domestic tourism demand increases occupancy rates in capital cities like
Sydney and Melbourne above the national average.
The theory of demand suggests, an increase in demand for a particular good increases
the demand for its complementary goods as well. In case of tourism, the complementary
services of tourism refer to other services related to tourism (Bernanke, Antonovics and

3ECONOMICS FOR MANAGERS
Frank 2015). Accommodation market is one sector directly related with tourism. With inflow
of tourists, there is a visible increase in demand for rooms and other services in hotel and
business apartment. There is also an increase in demand for passengers’ seat in domestic
airlines. Significant investment is needed to increase place in educational institute in order to
support inflow of international student.
The favorable economic environment of Australia is a significant determinant of
tourism industry. Australia is the only nation that escape from recession for a considerably
long period and maintain steady pace of economic growth (Heijdra 2017). Increase in number
of visitor support the growth of accommodation market especially the hotel market. Almost
50 percent investment in tourism industry have come from foreign investors (especially
China). Two vital capital cities Sydney and Melbourne constituted strong performance in
accommodation market. Steady increase in demand of tourism boosted new development in
Sydney. The Australian economy faced a temporary downturn resulting from slow-down of
the most prosperous mining sector. The situation however soon recovered. Growth of
Chinese visitors has been attributed from less complex procedure of visa processing
agreement of air service. The increase in visitation in terms of both domestic and
international and domestic visitors imply fast growth in the tourism industry.
The accommodation investment in the tourism industry include investment in stand-
alone accommodation as well as accommodation used for mixed purpose. Mixed-use
accommodation implies accommodation used for both tourism and non-tourism purpose.
Investment in the stand-alone accommodation accounted largest increase in the capital cities.
Significant investments have also been made on projects comprising mixed-use
accommodation.