Impact of Inflation on Tourism Industry: Positive and Negative Impacts and Solutions

Research Project

Table of Contents
Introduction.................................................................................................................................................3
Aims and objectives of research..............................................................................................................3
Impact of inflation on tourism industry...................................................................................................4
Positive negative impacts of inflation within tourism industry................................................................4
Solutions in order to deal with negative impacts of inflation significantly..............................................5
Research Methodology................................................................................................................................6
Conclusion...................................................................................................................................................7
References...................................................................................................................................................8

Introduction
Inflation occurs as a result of imbalance between supply & demand of money, change in
distribution and production cost, increase in the amount of taxes on different products. At the
time of inflation, the value of currency gets reduce. As a result one can buy fewer units of goods
& services through each unit of currency. It puts profound impact on consumers. Due to high
prices customers are not even able to afford basic commodities to survive in life. In simple
words, inflation is a suitable measure of purchasing power which shows the rate by which price
of a product or service gets change over the period of time (Dimopoulos, Queiros and Van Zyl,
2019). Consumer spending are declined when prices rise as they cannot afford to buy much
products.
List of events that can lead to inflation
There are several events which can cause inflation. Here, the list of such events is given
below:
 Interest rate: There is reverse relations between inflation and interest rate. At the time of
lower interest rate, people tend to take huge loans which lead the inflation at higher rate
and further affect the overall operations of the entity profoundly (Boehm and Kusen,
2018).
 Global events: Nowadays, global events are likely to organize at different parts of the
world. The main aim of such events is to ensure economic growth of the nation. During
such events, individuals are likely to spend their money which increases flow of money
across the economy and further lead towards high inflation.
 Increased money supply: It demonstrates the total amount of money in circulation
within the economy that covers cash, balance, bank accounts and more. If supply of
money increases faster than production, this might lead the economy towards inflation
(Gricar and Bojnec, 2018).
Aims and objectives of research
Research Aim: “To analyze impacts of inflation on tourism industry and solutions to
deal with negative impacts of inflation significantly”. A case study on ACE cultural tours.