Influence of Inflation on Tourism Company and Ways to Overcome the Challenge

This poster analyses the influence of inflation on tourism company and ways to overcome such challenge. It covers the causes of inflation, impacts on company's operations and performance, and inflation management strategies deployed.

A tourism company that has been affected by inflation
in the past and how it overcome this challenge

Introduction
Tourism industry covers all businesses which directly offers products as
well as services to support business, leisure activities and pleasure away
from the home environment. The respective industry plays a major role
in enhancing the economy of a country (Abbas, 2022). A rise in tourism
flow can bring favourable economic outcomes to the countries,
particularly in GDP and job opportunities. However, due to COVID-19,
tourism industry has faced various challenges and a huge amount of
loss. The objective of this poster is to analyse the influence of inflation
on tourism company and ways to overcome such challenge.
Key operations and markets
• The major operations of Jet2Holidays are to offer holiday packages
with quality destinations to its prospective market share according to
their wants and budgets perceptions.
• The respective company offers holiday packages as per various
budgets as well as facilitates market-base to choose varied locations
and services that can fulfil their needs and wants (Castro, Ferreira
and Nunes, 2020). The key popular destinations that Jet2Holidays
offer to its customers include Europe, United States as well as
Turkey.
• The organisation concentrates on customer-driven scheduling of
flights on routes to famous leisure locations within the
Mediterranean, Canary Islands and European Leisure Cities to
optimise load factor, flight-only ticket yield as well as average
package holiday price.
Conclusion
From above discussion, it has been concluded that inflation causes reduction in
consumer buying power as in this situation, there is decrease in the prices of the
products as well as services. The pandemic situation of COVID-19 has affected
the key operations and activities of the tourism industry. It has resulted in
lowering the number of workforce, rising prices of the flight tickets and so on.
The respective epidemic has also led to the situation of inflation because of
which more and more market share avoided to take services for the purpose of
consumption. There are multiple reasons due to which inflation situation has
been rising demand-pull inflation, cost-push inflation, policies as well as
regulations, increasing wages and so on. This situation can be controlled through
developing effective strategies that have been discussed within this poster. These
include price control, rising savings, inessential expenses, etc.
Inflation management
strategies deployed
The situation of inflation occurred through land values as
tourism industry develops extra demand for land. Nowadays
inflation impacting each kind of business throughout the world
and it has been observed that monetary policy is a key strategy
to control inflation within nation. For controlling as well as
quality of credit, central bank of the country adopted few
measures such as selling security in open market, increasing
reserve ratio, etc. which rises bank rates. It also adopts a wide
number of selective credit control measures such as rising
margin requirements, regulation of consumer credit, etc
(Nusair, 2019). Moreover, it can be controlled through
minimising inessential expenses and can be managed in case if
government take interests in reducing inessential expenses on
non-productive operations. This will concentrate on private
expenses which is depended on demands of government
regarding tourism services. Such kind of strategy should be
executed through taxation. Rise in people’s savings can also
manage the situation of inflation and it will facilitate in
reducing disposable income with market-base and ultimately
individual consumption expenses. Due to rising living cost,
people tend not to minimise their personal expenses or save
money based on their willingness. Payments which get
postponed have been introduced where market share saves
money as well as permits to return back it within later years.
For these reasons, the government of the country should
display public loans that hold intense interest rates, begin
saving schemes with prize money, lottery for long-run and so
on. It has also been analysed that there is also a requirement to
introduce provident fund-cum-pension scheme, compulsory
provident fund and many more. These strategies increase
savings and are promising to become effective to manage
inflation situation. Surplus budget is another way to measure
inflation (Kim and et.al., 2021). For such reason, the
government of the country should concentrate on deficit fiscals
and more concentrate on surplus budgets. This indicates
collecting more in earning as well as less in expenses. Price
control is another kind of measure that direct con troll the
situation of inflation. This means that fixing an upper limit of
the value of essential customer services and products. This also
assists in fixing the prices through support of law and with
anyone charging more than such prices are punishable by
legislative body.
Company background and
overview
• Jet2Holidays is a UK-based package holiday provider as well as tour
operator in Britain. The respective organisation was founded in the
year 2007 and is offering its services within Europe, United States
and Turkey providing package holidays to its potential market share.
• The mission of Jet2Holidays is to create memories for its customer-
base from ensuring a swift as well as safe journey, right down to
little details which mean so much (Balli, Ghassan and Al Jeefri,
2020) .
• The company is engaged in offering great-value package holidays to
the sun destinations throughout Europe from ten UK airports.
References
•Abbas, S. K., 2022. Asymmetry in the regimes of inflation and business cycles:
the New Keynesian Phillips curve. Applied Economics, pp.1-14.
•Balli, F., Ghassan, H. B. and Al Jeefri, E. H., 2020. Towards understanding GCC
outbound international tourism. Journal of Policy Research in Tourism, Leisure
and Events, 12(2), pp.142-151.
•Castro, C., Ferreira, F. A. and Nunes, P., 2020, October. Digital technologies and
tourism as drivers of economic growth in Europe and Central Asia.
In International Conference on Tourism, Technology and Systems (pp. 341-350).
Springer, Singapore.
•Floyd, D., 2020. CORONAVIRUS AND INFLATION. Teaching Business &
Economics, 24(2), pp.27-28.
•Kang, S. H., Hernandez, J. A. and Yoon, S. M., 2019. Who leads the inflation
cycle in Europe? Inflation cycle and spillover influence among Eurozone and
non-Eurozone economies. International Economics, 160, pp.56-71.
•Kim and et.al., 2021. Spatial spillovers of agglomeration economies and
productivity in the tourism industry: The case of the UK. Tourism
Management, 82, p.104201.
•Nguyen, C. P., Binh, P.T. and Su, T. D., 2020. Capital investment in tourism: a
global investigation. Tourism Planning & Development, pp.1-27.
•Nusair, S. A., 2019. Oil price and inflation dynamics in the Gulf Cooperation
Council countries. Energy, 181, pp.997-1011.
Inflationary periods and main causes Impacts of inflations on company’s
operations and performance
Because of the situation of inflation, the market share does not travel as well as try
to avoid using travel and tourism organisations during inflation period, the prices of
the ho0liday packages and tourism related services rise. Hence, customers are price
sensitive and make use such travel and tourism organisations for holiday packages
and tourism who offer same services at minimised price whichever is possible.
during inflation period, the customers of the business may shift to other travelling
agencies which adversely impacts on the overall growth of organisation.
Additionally, Jet2Holidays makes efforts to cut tourism as well as holiday packages
prices as much as they can do and even declined salaries of its manpower for
minimising overall prices of their tourism services to market-base. It may cause
dissatisfaction among human resources and minimise the level of their performance
which made complex for organisations in maintaining employee retention for long-
run (Nguyen, Binh and Su, 2020). Similarly, Jet2Holidays also make better plans
and strategies during inflation period in order to overcome associated issues. Thus,
large amount of money and time get wasted on new plans and their execution.
Presently, yearly inflation rate of UK is 9.9% considered as intense inflation rate for
any country. It is not effective for any kind of industry within UK such as tourism
and travel industry. Pandemic situation of COVID-19 as well as Ukraine-Russia war
has risen inflation situation throughout the world. Mostly large tourism
organisations have experienced intense inflation and navigated that the organisation
impacted through such environment. It is the complex period for tourism industry
and also affected revenue of Jet2Holidays which led to huge losses within such
industry.
As per the analysis, it has been examined that, Jet2Holidays has experienced wage
inflation in its past years and consequently, the human resources of the respective
organization began to demand more salaries, increasing business cost as well as led it to
increased prices for its tourism services. Organization was paying more to its employees
and hence was growing which resulted in rising in wages within respective organization
(Floyd, 2020). Thus, Jet2Holidays had to increase its services prices for maintaining
same profitability level and to offset such increment in cost. The situation of inflation is
impacted by various factors and most of economic issues are on both micro as well as
macro level. This implies that there are multiple levels at which nation’s economy along
with ability can exist. Internal organizational motivations (microeconomics) and ability
of supply of products and services (macroeconomics) play a great role in price
developments that causes inflation.
Macroeconomic causes of the inflation
• Demand for the tourism related services exceeds the level of pre-pandemic situation.
• Economic lockdowns and Covid-19 guidelines across the world resulted in unstable
supply chain as well as production capacities (Kang, Hernandez and Yoon, 2019).
• Political rules and regulations as well as issues related to sanctions and restrictions
resulted in disruption within sully chains and led to shortages.
Microeconomic causes of the inflation
• Because of lack of effective talent, there is intense competition that increases hiring
cost of talent and resulted in increasing cost of the organisation as a whole.
• In case if the supply chain along with various factors have no direct influence on the
business then Jet2Holidays may still observe increasing prices as well as decide to
increased prices with a key objective to maximise profitability level.
• The respective company increases prices of its services which resulted in constraints
within supply chain and developments in macroeconomic factors. Changes in prices
are often much larger as compared to necessary that causes the situation of inflation
to rise.
• Rise in prices could be varied out by microeconomic scarcity. In case when an
organization selects not to rise production for accomplishing demands as it might not
want to include extra costs in case if demand decreases or because it wants to limit
supply in order to artificially increase profit margins and prices.