Impact of Inflation on Tourism Companies: A Case Study of Hays Travel

This presentation discusses the impact of inflation on tourism companies, with a case study of Hays Travel. It covers the causes of inflation, inflation management strategies, and how Hays Travel overcame the challenge of inflation.

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

Introduction
Tourism industry is considered as the fastest growing industry within the
world that consists of complex industries like hospitality, travel companies,
tourist destinations and many others that have major emphasis on tourism.
Such kind of industry has faced a lot of challenges as well as many ups and
downs during the period of pandemic situation of COVID-19 (Ghosh, 2019) .
This industry is primarily relies on the seasonal operations of the business.
The key objective of this poster is to analyse the influence of inflation on
tourism-based organisations and also covers ways to overcome such
challenge.
Key operations and markets
• The key operations of Hays Travel consist of offering holiday packages
with quality destinations to its market share according to their varied
needs and wants as well as within their budget.
• The respective organisation offers holidays packages to its target
market as per different budgets and also facilitates market share in
choosing various places and services that can fulfil their desires and
requirements (Kisswani and Harraf, 2021).
• The key famous destinations or places where Hays Travel provide its
services to its customers comprise of Greece, Malta, Portugal, Canaries,
Italy, Spain, USA and many more.
• The organisation is involved in providing a large number of travelling
facilities to its potential target market whether it is solo travelling or is
travelling with the members of family.
Conclusion
From above discussion, it has been concluded that the situation of inflation has
aimed to reduce customer power through rising services and products prices. There has
been a great impact of COVID-19 on the activities as well as operations of the tourism
industry through minimising the workforce, rising charges of flight tickets, etc. The
impact of this pandemic situation also resulted in inflation because of which more
consumers avoid to take services or products for the purpose of consumption.
Additionally, there has been more causes due to which inflation increased cost-push
inflation, rising wages, demand-pull inflation, policies as well as regulations and so on.
Moreover, the situation of inflation can be managed with various appropriate strategies
as well as measures that have also been described within this report including price
control, minimising rising savings, unnecessary expenses, etc.
Inflation management
strategies deployed
The situation of inflation is caused by the values of land as
tourism develops extra demand for land. Nowadays, inflation
impacts each and every business throughout the world. This has
been seen that monetary policy is considered as one of the major
strategy for controlling inflation within the nation (Page and
Connell, 2020). For the purpose of controlling quantity as well as
quality of credit, central bank of the nation has adopted some
approaches like selling security within open market, increasing
reserve ratio, inflation rises bank rates and central bank adopts
multiple selective credit control measures such as enhancing margin
requirements, regulation of consumer credit and also this can be
managed through minimising inessential expenses. This can also be
managed on case if government of the country take interest for
reducing ineffective expenses on non-productive activities. this will
concentrate on private expenses that are reliant on government
demand for products as well as services. such strategy must be
supplemented through taxation. Rising savings of people can
manage inflation which will facilitate in minimising disposable
income with people and therefore, individual consumption
expenses. Because of rising cost of livings, people tend to minimise
their personal expenses on voluntary basis. Postponed payments
have been introduced where target market save money and permits
to return back it after few years. For these reasons, political system
of nation should discover public advances holding high interest
rates, start saving schemes with prize money, lottery for long-
period, etc. There is also a significance of introducing compulsory
provident funds, provident fund-cum-pension scheme and many
others (Su, 2020). These kinds of strategies increase savings and are
more promising to be effective in process of managing inflation
situation. Surplus budget is another measure for managing inflation.
For such kind of reason, political system of country should not
emphasize on surplus budgets. This indicates gathering more in
earning as well as less in expenses. Price control is considered as a
measure of direct control for managing inflation which means that
fixing an upper limit for essential consumer products value. This
facilitates in fixing prices through law with anyone charging more
as compared to these pries are punishable legislative body of the
nation.
Company background and
overview
• Hays Travel is considered as one of the greatest travel agency within UK
and it was founded by John Hays in the year 1980 in Seaham, Durham.
• The company has various retail travel operators in UK and the
headquarter of organisation is situated in Sunderland, England (Icoz and
Icoz, 2019).
• Respective organisation is engaged in offering a large number of tourism
services such as resort, package holidays, cruise lines, etc. Hays Travel
has over 450 branches throughout the world and it has reached up to the
sales of £1 billions since May 2018.
References
• Ghosh, S., 2019. Uncertainty, economic growth its impact on tourism, some
country experiences. Asia Pacific Journal of Tourism Research, 24(1), pp.83-107.
• Icoz, O. and Icoz, O., 2019. Economic impacts of tourism. In The Routledge
Handbook of Tourism Impacts (pp. 95-108). Routledge.
• Kisswani, K.M. and Harraf, A., 2021. Asymmetric impact of oil price shocks on
tourism: Evidence from selected MENA countries. In Economic Development in
the MENA Region (pp. 45-63). Springer, Cham.
• Nguyen, C.P., Binh, P.T. and Su, T.D., 2020. Capital investment in tourism: a
global investigation. Tourism Planning & Development, pp.1-27.
• Osinubi, T.T., Osinubi, O.B., Tabash, M.I., Ajayi, A.O. and Tran, D.K., 2021. The
impact of corruption on tourism sector in Nigeria: Empirical insights by using an
autoregressive distributed lag bounds (ARDL) testing approach. International
Journal of Hospitality & Tourism Administration, pp.1-20.
• Page, S.J. and Connell, J., 2020. Economic impacts. In Tourism (pp. 356-374).
Routledge.
• Su, X., 2020. Simulation of economic development of tourism industry based on
FPGA and machine learning. Microprocessors and Microsystems, p.103523.
• Wang, L. and Zhang, H., 2019. The impact of marine tourism resources
development on sustainable development of marine economy. Journal of Coastal
Research, 94(SI), pp.589-592.
Inflationary periods and main causes Impacts of inflations on company’s
operations and performance
Because of inflation situation, market-base not travels and also try to avoid interacting
travel and tourism organisations. This is because at inflation period, prices of holiday
packages as well as tourism services rises. Hence, customers or travellers are price
sensitive and using such travel and tourism organisations will provide same services at
lower prices. Within Inflation, customers of such companies may shift to other travelling
agents which negatively influenced on their growth. Hays Travel make efforts at its best
for minimising prices of tourism and holiday packages whatever is possible and even
reduce manpower salaries for declining overall prices of their tourism services to market-
base. It may caused employee dissatisfaction as well as reducing their performance which
made it complex for organisations for employee retention for longer-period. Similarly,
respective company also tries for better planning and strategies during inflation for
overcoming issues. Therefore, a large amount of money and time get wasted on new plans
as well as execution of plans. Presently, annual rate of inflation in UK is 9.9% considered
as high inflation rate for any country. It is not effective for any industry within UK consist
of travels and tourism industry. COVID-19 as well as Ukraine-Russia war has enhanced
inflation throughout the world. Most of the large companies have gained experience high
inflationary pressure as well as navigated that their organisation passes through such an
environment. This is the typical situation within tourism industry that also influenced
revenue of Hays Travel due to which organisation faced a large amount of loss within such
sector.
As per the discussion, it has been analysed that Hays Travel has experienced wage inflation
within the pat years that consequently resulted in employee demanding high salaries,
increasing the cost of the business as well as led to force to increase the prices for its products.
As the company along with its services was growing because it was more paying to its human
resources which led to rise in the wages of the respective organisation (Nguyen, Binh and Su,
2020). Hence, for maintaining the same level of the profitability, the company had to increase
its service prices in order to offset such rise in costs. The situation of inflation is impacted
through a large number of factors. Most of the issues related to economy are on the micro as
well as macro levels. This implies that there are various levels at which the basic economy as
well as ability can exist. Ability of supplying products and services and industry-specific or
internal organisations motivations play a great role in price increment.
Macroeconomic causes of the inflation
 Demands for the services are more as compared to pre pandemic situation.
 Economic lockdowns and guidelines of government during COVID-19 across the world has
led to an unstable production capacities as well as supply chains.
 The global tension along with the pressure of political system of the country from the
restrictions as well as sanctions resulted in disruption within the supply chains and results in
shortages (Osinubi and et.al., 2021).
Microeconomic causes of Inflation:
• Rise in prices could be brought on by microeconomic scarcity as when a business goes with
not to enhance production for completing increasing demands because it might not desires
to incur extra costs in case if demand reduces or because it wants to limit supply to
artificially increase margins and prices.
• Because of shortage in talent, there is tough competition that enhances the cost of hiring
talent as well as running the organisation which leads to increase in prices.
• Companies increases product prices that leads to supply chain constraints as well as
microeconomic development, changes in prices are often much greater in relation to
inessential that causes inflation to enhance (Wang and Zhang, 2019).
• In case if supply chain and other determinants have no direct influence on an organisation
then they may still observe increasing prices as well as decide to boost them with an aim of
enhancing profit margins.