Impacts of Inflation on Tourism Industry and Solutions

This article discusses the impacts of inflation on the tourism industry, both positive and negative, and provides solutions to ease the negative impacts. It also includes reliable statistics on the impact of inflation in recent years and defines the concept of inflation. The article concludes with solutions that tourism organizations can use to minimize the adverse influence of inflation.

Research Project
(Impacts that inflation can have on tourism
industry and solutions to ease negative
impacts)

Table of Contents
Topic: “What are the typical impacts that inflation can have on the tourism industry and what
solutions, to ease the negative impacts, can be implemented?”......................................................1
Definition................................................................................................................................1
Reliable statistics of impact of inflation has has in recent years............................................2
Positive as well as Negative impact of Inflation....................................................................2
Using Research, Conclude with the solutions whicb tourism industry can use for minimising
adverse influece of inflation that aims to recognise solutions for tourism organisaions for
supporting the pressure of inflation........................................................................................3
REFERENCES................................................................................................................................5
Appendix .........................................................................................................................................6

Topic: “What are the typical impacts that inflation can have on the tourism
industry and what solutions, to ease the negative impacts, can be
implemented?”
Definition
Tourism industry includes multiple businesses like food and beverages, hotel,
transportation and many others. There are several developed countries where tourism sector
contribute in a great way towards upliftment of th economy. Through making observations of the
conditions of the market, this has been examined that buying power of the market-base has also
get influenced because of rise in the prices of products and services. Because of the pandemic
situation of COVID-19, there was an economic lockdown that has greatly influenced every
industry in an adverse manner (Dimopoulos, Queiros and Van Zyl, 2019). There are a lot of
preventive measures which are used by the tourism industry with a primary objective of dealing
with negative issues. This has also been founded that inflation is considered as a key ground
which can impact the tourism industry of various countries. At time of inflation, money supply is
more than the products as well as services that are available. Beyond all these, this has also been
examined that the situation of inflation has power to enhance the amount of money in relation to
the supply of the available products and services. In addition to it, the situation of inflation is
also defined as a measure of rate of increasing prices of products and services within a country's
economy. Because of this, the situation of inflation has been referred to a measure of rate of
increasing prices of the products and services within an economy. Because of this, inflation has
been known to take place within a country's economy when their prices rise dure to rise in
production cost (Ghosh, 2019). For instance, if employees wages and raw material prices rise
the, production cost get reduced and at that time inflation will take place. This has also been
observed that when demand for products and services rises within an economy then, it results in
the situation of inflation. It is because targeted-audience got ready to pay more or whatever
money that market charge from them during such time-period. Cost-push and cost-pull inflation
are another key reasons of inflation situation within an economy. Consumer Price Index,
Producer Price Index and Consumption Expenditure Index are some tools for measuring inflation
effectively.
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Reliable statistics of impact of inflation has has in recent years
This has been observed that inflation situation has power to influence the small as well as
medium size business because there is approximately 85% of the owners of business who has
shown their concerns towards respective situation. The fact is that inflation is referred to
considerable and big concept and each business owner of medium as well as small size
organisations got ready to face the influence of inflation on its business (Icoz and Icoz, 2019). In
addition to it, this has become significant to have clear understanding regarding how inflation
can impact business and what strategies can be used or followed in order to overcome the
challenges during inflation. Most of the people have faith that inflation is bad aspect as it rises
the prices of products and services. For instance, The inflation rate of Federal Reserve is aimed
at 2% per year and because the level of inflation is too low, it weaknes the economy of the
country. However, it has been identified that the situation of inflation has considered as a fiscal
burden for customers and small-medium enterprises when it is at intense level (Nguyen, Binh
and Su, 2020). Due to pandemic situation of COVID-19, SMEs struggled for dealing with
increased inflation cost. The most common way through which SMEs get influenced inflation
primarily involve increasing price, greater cost, tighter profit margin, cutting overhead and many
other.
Positive as well as Negative impact of Inflation
Positive Impact of Inflation
At time when the situation of inflation takes place, the producers of the products as well
as services gain advantage of charging more money from their market share as at that time, the
customers get ready to pay more for availing such goods and services. Additionally,
organisational profitability also increaes through selling products and services at high prices and
helps businesses in improving their financial base. Furthermore, when prices of products and
services get increase, the situation of inflation takes place. On the basis of various economists,
inflation leads to expansion of money supply in relation to supply of accessible products
(Osinubi and et.al., 2021). Beyomd it, this has also been analysed that some level of inflation
results in economic growth which is beneficial for any country. Deflation is opposite to inflation
in which product's price gets declined. Moreover, it also creates adverse impact relationship
between inflation and unemployment which results in rising inflation that may offset rising
unemployment withn country.
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Negative Impact of Inflation
The major negative influence of inflation is that it reduces buying power of the people as
they could not buy products as well as services which they purchase before the situation of
inflation. Hence, inflation primarily impacts the people of lower class category because it
becomes very critical for them to purchase or afford such basic stuff from the marketplace. There
is also another influence of inflation which is associated with loss of products and services as
most of the tourism and other businesses get influenced by the situation of inflation (Page and
Connell, 2020). The major grounds behind it is that people prefer to invest on only those
products and services which satisfy their basic needs and wants. Additionally, income as well as
savings of the people become less valuable because of the inflation as people do not have
capability to save much amount of their income. This has also been identified that it is
considered as one of the complex and major issues of a country. When product prices get more
the employees also want to have fair amount iof salary and wages. Because of this, the
organisaion has to rise the prices of their product more. Moreover, money also loses its value
when product prices get increased because of the inflation.
Using Research, Conclude with the solutions whicb tourism industry can use for minimising
adverse influece of inflation that aims to recognise solutions for tourism organisaions for
supporting the pressure of inflation.
This can be identified that in the process of dfevelopment of any nation, the tourism
industry plays a major role in making different places unique as well as attractive for the purpose
of capturimg a large number of target market. In context to the situation of the market, the
buying power of the marker share get impacted becaue of the rise in prices of the products and
services of organisation. In addition to it, the pandemic situation of COVID-19 as well as
economic lockdown at that time period along with new preventive measures has a great negative
influence on all types of industries. The influence of inflation assists in minimising the buying
power of the families because of rise in product's price (Schmude, Karl and Weber, 2020). The
impact of the situation of inflation can be overviewed throughout different sectors within the
economy and some of these are positive impacts to others while some are adverse to others. The
uncertainty within the prices of the products as well as services may result in reducing the
investment level and also savings for the future. Furthermore, there are several solutions which
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are given to Opodo UK that can be used by the respective organisation in getting rid of these
adverse impacts of the inflation. Some of these solutions are discussed as below:
 Proper and accurate financial plan should be designed with a key objective of performing
better during inflation period (Su, 2020). In addition to it, effective trainig and
development sessions must be given to manpower of the company for dealing with the
complex situations that occur at workplace. Another solution to Opodo UK is to target on
increasing the output level as it can be observed that when employees contribute within
organisaion, it will tend to rise the profitability level of the company.
 Opodo UK is also recommended to capture more and more new market-base towards its
business. This has been identified that when market share is engaged in business then
organistional cost and rates will also be less. Because of which the market segments
which was unattainable can now be reached. In such process, deflation results in reducing
the cost of many products, including food. This can also be observed that deflation
appears to be helpful in increasing money value (Wang and Zhang, 2019). In addition to
it, the share prices of the organisation will serve as the ley component within the stock
market as well as economy. In such way, deflation can be avoided by having some sort of
inflation.
 Another solution is to keep the target on stocking up of the supplies or associated to the
services so that the selected organisaion will be able to resolve the issues concerned with
the situation of inflation as well as supply chain.
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REFERENCES
Books and Journals
Dimopoulos, D., Queiros, D. and Van Zyl, C., 2019. Sinking deeper: The most significant risks
impacting the dive tourism industry in the East African Marine Ecoregion. Ocean &
Coastal Management, 181, p.104897.
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.
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 and et.al., 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.
Schmude, J., Karl, M. and Weber, F., 2020. Tourism and Terrorism: Economic impact of
terrorist attacks on the tourism industry. The example of the destination of
Paris. Zeitschrift für Wirtschaftsgeographie, 64(2), pp.88-102.
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.
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Appendix
Gantt Chart
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