The Travel and Tourism Sector

This report explores the key historical developments in the travel and tourism sector and their impact on the industry. It also discusses the structure of the industry and the implications of political changes on the sector. The report further examines the factors affecting tourism demand and the changes in supply to meet changing demand.

The Travel and Tourism Sector

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
LO 1.1 Key Historical developments in travel and tourism sector..............................................1
LO 1.2 Structure of travel and tourism sector.............................................................................3
TASK 2............................................................................................................................................5
LO 2.3 Implication of political changes on travel and tourism sector.........................................5
TASK 3............................................................................................................................................6
LO 3.1 Factors affecting tourism demand...................................................................................6
LO 3.2 Changes in supply to meet changing demand.................................................................7
TASK 4............................................................................................................................................8
LO 4.1 Positive and negative economic, environmental and social impact of tourism...............8
LO 4.2 Strategies that can be used to minimise negative impact while maximizing the
positives.......................................................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

TABLE OF IMAGES
Figure 1: Poster - Historical Developments.....................................................................................2
Figure 2: Poster - Structure of Travel and Tourism Industry..........................................................4

INTRODUCTION
Travel and tourism industry has emerged as one of the key components of any economy.
Various studies and real life situations have stated that a country can grow and develop if its
travel and tourism industry functions at an optimal level (Holloway, 2009). Travelling has
become an integral part of everyday lives of people. Due to this reason importance of this
industry has increased manifolds in recent some years. The present report explores different
aspects of this sector. It sheds light on key historical developments and their impact on the travel
and tourism industry. Further a thorough discussion on influence of local and national
government and international agencies in UK have affected operations of the industry.
TASK 1
LO 1.1 Key Historical developments in travel and tourism sector
Over the years there have been numerous developments due to which this sector has
grown at an exponential rate. Its development through history can be divided into three parts:
“before 1945”, “1945-1979”, and “1980 to current day” (Sharpley, 2006). It is presented in the
following poster presentation.
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Before 1945
Very less travel and
tourism activities during
the 16th century
Travel activities limited to
rich elite class during 18th
century
Prior to 50s travel and
tourism industry was
inconsistent
Until 1946, much of
international travel was
only for the privileged,
wealthy and elite groups
Thomas Cook introduced
the first tour package in
1841
The first passenger
railway started operating
between Liverpool and
Manchester in 1830
1945-1979
Tour
operations
started
changing from
individual
businesses to
integrated
service
providers
After 1950
variety of
factors helped
in growth of
the industry
Availability of
free time,
increase in paid
holidays,
improvement
of package
tours, growth in
air transport,
etc.
1980 to current
day
Airlines started
offering full
travel services
During 1990
tourism
industry was
formulated
Quality and
quantity of air
travel improved
during this
period
From the above diagram it can be clearly observed that the travel and tourism industry
has undergone numerous changes which has helped it to grow at such an exponential rate. This
2
Figure 1: Poster - Historical Developments

development, as per the diagram can be divided into three sections. Prior 1945 period can be
categorised as one where travel and tourism activities were either minimum or non-existent. It
can be supported through fact that it was exclusive only to the rich and elite class of people
(Tribe, 2005). Moreover during the 16th century majority of people made their living through
agricultural activities. Due to this, they seldom had the time to engage in travel activities. In
addition they did not had access to these engagements primarily because of lack of financial
resources. Similar trend continued during the 1950s as well. The tourism industry was rather
very inconsistent, as hotels, transport operators worked separately. But this all changed during
period of 1945-1979, as the tourism industry became more organized. At this time participants of
the sector started forming alliances and coordination with one another instead of working as
separate business units (Wang, 2009).
LO 1.2 Structure of travel and tourism sector
The travel and tourism industry is one of the fastest growing sectors around the world.
Numerous analysts have predicted that the industry will continue to experience upward growth in
coming years. The following diagram represents structure used in the industry.
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Airports and
airlines
Travel and
tourism
industry
The public
sector
Conferences and
exhibition organisers
Visitor attractions
Tour operators Travel
agents
Accommodation
Rail travel
Road
travel
Sea travel
On basis of the above diagram it can be said that travel and tourism industry is one of the
most complicated sectors as there are numerous participants involved in it. This structure is not
very old and there are numerous elements which have very recently became a part of the
industry. One such component is the conferences and exhibition organisers (Ouerfelli, 2008).
Initially travel industry consisted of only three main parts: airports, travel agents and
accommodation. But with passage of time the industry grew and newer elements were added to
it. This continuous expansion at horizontal level is the main reason behind such profound growth
of the industry. Airlines and airports form the component which people use to travel by air. It is
the fast mode of transportation and the most efficient one as well. Travel agents are another part
of structure of the travel tourism industry. They can be called as link between all other
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Figure 2: Poster - Structure of Travel and Tourism Industry

components of the sector. Travel agents develop and maintain relations with different travel and
tourism service providers and sell their services to customers as a complete package (Goh, 2012).
Conferences and exhibitions is the new part of this industry. Some service providers sell travel
packages to companies so that they can attend different corporate events. They aim at providing
complete travel solutions like accommodation, leisure, visitor attractions, etc. Business persons,
executives now a days travel all around the world for such purposes and they need to have easy
access to travel services. Considering this, many organizations have created their own travel
desks, so that employees find it a lot easier to travel from one place to another, whether local,
national or international. New forms of travel have emerged like sea travel. Road travel and rail
travel are some of the oldest format of travel (Araña and León, 2008). People have been using
them since years and they have found these to be very comfortable. In recent years, number of
people travelling by road have increased substantially, mainly because there has been an increase
in popularity fo adventure activities. Road travel is a part of it.
TASK 2
LO 2.1 and 2.2 covered in PPT.
LO 2.3 Implication of political changes on travel and tourism sector
It is a well-known fact that travel and tourism is one of the most important business
sectors in the world. Its importance has increased in last some years. During the case it is clear
that political changes have a significant impact on the overall travel and tourism industry.
Decision taken by UK government to give visas to Chinese tourists will have a major impact on
country’s travel industry and eventually its economy as well (Gössling and et. al, 2012).
From the year 2016, UK would give new tourist visas that will be valid for a period of
upto 2 years instead of previous 6 months only. In addition, plans have been put into place to
introduce a 10 year multiple visit visas to Chinese tourists. As the Prime Minister Mr. Cameroon
said, main objective of this change in the visa and immigration policy is to attract more Chinese
travellers. The UK government has realised that China is its biggest market in terms of travel and
tourism business (Deluna and Jeon, 2014). Therefore by attracting more people from this Asian
country, government hopes to enhance performance of the industry and provide greater support
to the economy. According to the past data for years 2009-14 number of Chinese visitors in the
UK increased by 112%. During same time period spending by these tourists rose by 167%. As
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per study conducted by Oxford Economics, in the next 8 years this spending amount by Chinese
tourists could increase by as much as 77% (Chen and Wang, 2007). It is a clear indication that
UK government’s decision to introduce the new visa and immigration policies can work wonders
and provide the best results for the country. This way its travel industry can sustain easily and
contribute significantly to national economy. If the forecast given by Oxford Economics proves
to be true, then this decision would be very useful and effective for the country.
There are various factors that motivated the government to take this decision. One of
them was that the Chinese tourists contribute nearly £500 million to UK economy every year
(Lin and Matzarakis, 2008). This means that if the country somehow is able to attract more
Chinese tourists then its economic performance can be improved significantly. The travel
industry is a major part of UK economy and thus the government needs to ensure that its
performance is as per set standards and pay attention to maintaining it. Due to this decision some
changes have been brought in the travel and tourism industry. For instance, new hospitality
services are being developed so that demands and expectations of Chinese tourists can be
accomplished. It includes the likes of making hotel rooms perfect as per “feng-shui”, providing
Chinese breakfasts, employing either Chinese speaking staff or training the existing employees,
translated audio guides, etc. (Lucy, 2014). Government through these initiatives wants to make
sure that the tourists enjoy their visit and leave with a memorable experiences so that they visit
the country again. On this basis it can be said that political situations is one of the factors that has
significant impact on the travel and tourism industry.
TASK 3
LO 3.1 Factors affecting tourism demand
Demand for the tourism products & services are important factor which needs special
consideration and management for the travel & tourism industry. Demand of tourism products or
services would define the number of tourists visiting a particular tourism destination (Frechtling,
2012). The major factors affecting demand for the tourism products & services in context to UK
can be given as under along with detailed impact of each factor on travel & tourism industry:
 Demographic: The changing demography of consumers has impacted the demand as
tourists are having higher spending power; include high number of young consumers and
higher travelling frequency for consumers (Moutinho, 2011). These factors are shaping
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the demand in positive direction as tourists are making higher spending on the tourism
activities.
 Technological: Technological factors such as online reservation system and availability
of information on internet has affected demand as consumers are able to get all
information and demand would increase with increasing technology in travel & tourism
industry.
 Currency rate fluctuations: Declining currency prices for the destination country would
attract higher number of tourist in that country as the money would have higher value in
that country (Assaker, Vinzi and O’Connor, 2011). For example if prices of GBP would
fall as compared to the US dollar then there would be higher demand for the tourism
services of UK in America and other countries have dollar currency.
 Economies: The economic conditions in different countries would also impact the
demand for tourism products & services. In case a country is going through economic
crisis then there would be lesser demand for the tourism products and services as tourists
would be reluctant to make much spending (Hong, 2011).
 Political stability: A country with high degree of political stability would have high
demand of tourists all across the world. Political stability is one of the major reasons for
increasing demand from tourists in UK.
 Interest rate inflation: Inflation in interest rate would increase overall costing for the
money and consumers would be willing to spend lesser amount with higher interest rates
prevailing in the market.
 Globalization: Increasing trend of globalization and movement of consumers and service
providers from one country to another has enabled the trend in travel & tourism industry
thereby more and more consumers are travelling from one country to another
(McKercher, Chan and Lam, 2008). This has created higher demand for products and
services in tourism industry in UK.
LO 3.2 Changes in supply to meet changing demand
It is important to create a balance between demand and supply of the tourism products
and services offered by a country so that entire industry can run smoothly. The government and
other stakeholders in tourism industry would be putting continuous efforts in order to strike a
balance between the two factors (Serquet and Rebetez, 2011). Supply of the tourism products &
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services has been changes in accordance to manage the situation smoothly and stakeholders in
tourism industry have responded positively towards increasing demand. There are several factors
which have been modified in order to meet demand for the tourism products & services and these
elements are provision for accommodation, quality, service, seasonality, types of products and
technology deployed in travel & tourism industry.
There is increasing pressure over accommodation in order to manage increasing demand
and higher numbers of accommodations are developed at the tourist places (Song and Li, 2008).
Tour operators industry has managed to grow significantly in order to manage increasing
demand for the tourism products & services so that tourists are able to get proper information
and facilities at these destinations. Quality and service aspects are of prime importance for the
tourists in present time and stakeholders in tourism industry have focused their attention on these
aspects in order to manage the demand for tourism products & services (Eugenio-Martin and
Campos-Soria, 2010). Seasonality in demand for the products and service need to be managed by
increasing pricing for the peak season and reducing prices in the off season so that demand can
be managed in off season as well. Technology is also one of the enabling elements in order to
manage the demand for tourism products and service as with online reservation and online
information it has become easy for the tourists worldwide to avail these services from their home
country only.
TASK 4
LO 4.1 Positive and negative economic, environmental and social impact of tourism
Tourism industry is considered as one of the fastest growing industry in the world and
there are several benefits and limitations of tourism activities on the host countries managing
these activities. Factors such as economic, environmental and social would have both positive as
well as negative factors on travel & tourism industry worldwide (Hamilton and Tol, 2007). The
positive economic benefits of travel & tourism industry would include higher income, higher
employment, government tax base, higher taxation receipt, and increase in export business,
economic development and inflow of foreign currency for the host country. Negative impacts of
economic factors on travel & tourism industry would include higher cost of living, inflation rate,
and demand for public service, property taxes and higher dependency of economy on tourism
industry.
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In terms of positive environmental impacts conservation of the natural resources,
planning & control, beautification, community revitalization and maintaining quality of
environment (Stepchenkova and Eales, 2011). Negative impacts observed for the environmental
factors would include the destruction of flora & fauna of the host country, degrading landscape,
impact due to pollution and effect on the natural scarce resources. The social factors have
positive impacts on tourism industry in form of conservation of the cultural values of a country
and rehabilitation of monuments. Negative impacts of social factors on tourism industry would
include loss of domestic festivals and impact on the local culture from the tourist coming to visit.
Looking into the cultural aspects it can be said that intercultural understanding and
globalization of culture are the major positive impacts sought by host country through tourism
activities while there are several negative impacts of tourism activities for social factor such as
commercialization of the traditional events, loss of local identify and local craft & skills etc. (Ng
and Soutar, 2007). Hence the economic, political, environmental and cultural factors are having
both positive as well as negative impact on the travel & tourism industry thereby leading to help
host country to understand the analysis of overall benefits which would be sought through
tourism activities. Further analysis of the benefits and limitations for these factors would help in
order to understand the issues and solution would be proposed for the limitations of any
particular factor in order to make the arrangement to solve the issues faced in organizational
context (Song and et. al, 2010).
LO 4.2 Strategies that can be used to minimise negative impact while maximizing the positives
In order to deal with the negative consequences of the various factors such as political,
economic, environmental and cultural aspects it is important that effective strategies are framed
and implemented in context of a particular host country (Cleanthous, 2008). Negative economic
impacts can be minimized by adopting the strategy of managing local standard of life at
manageable level so that standard of living does not increase much for the local people living in
the area. Further local people should also be included in the economic policy so as to provide
benefits to them so that they can handle the increasing prices. Strategy of diversification can be
used so as to reduce the dependency on the tourism industry wherein there should be proper mix
and dependency on different sectors so that in any particular situation if any sector is not
performing as per expectation so there are no major impacts of this on the overall economy of a
country (Sharpley, 2006).
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Negative environmental impacts can be reduced by developing the key policy in
environmental context so as to resolve conflict between access to natural resources and
environmental decay of the natural resources. This policy developed and a committee appointed
in order to ensure the conservation of environmental factors would ensure the minimum possible
environmental impacts for the environmental factors on the travel & tourism industry (Gössling
and et. al, 2012). Further environmental protection agencies need to be appointed who would
conduct the review of a particular tourism destination in country and based on the negative
impact analysis on these tourism activities future policies concerning the environmental impacts
for tourism sites would be developed.
Negative cultural impacts can be minimized by maintaining a strong host country culture
which can have good understanding for the other culture coming in contact to that culture
through tourism activities but people should be dedicated towards adoption of their own culture.
This would help people in host country to adopt their own culture and not getting influenced
from the western and other culture as brought by tourists coming from different parts of the
world (Moutinho, 2011). Further usage of the latest technological equipment, managing active
communication and developing of monitoring tools in the travel & tourism industry is vital for a
country to manage the least possible negative impacts of all environmental factors.
CONCLUSION
The travel industry has a crucial role to play in any nation’s economy. This is the main
reason that countries around the world are paying a lot of attention to developing the sector and
improve its performance. From this study it can be said that travel and tourism sector boasts of
having a very rich history. Over the years it has undergone a lot of changes and development.
These eventually have helped the industry to grow at an exponential pace. Further this report also
explained the impact of political changes on the travel industry.
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REFERENCES
Books and Journals
Araña, J. E. and León, C. J., 2008. The impact of terrorism on tourism demand. Annals of
Tourism Research. 35(2).pp. 299-315.
Assaker, G., Vinzi, V. E. and O’Connor, P., 2011. Examining the effect of novelty seeking,
satisfaction, and destination image on tourists’ return pattern: A two factor, non-linear latent
growth model. Tourism Management. 32(4).pp. 890-901.
Chen, K. Y. and Wang, C. H., 2007. Support vector regression with genetic algorithms in
forecasting tourism demand. Tourism Management. 28(1).pp. 215-226.
Eugenio-Martin, J. L. and Campos-Soria, J. A., 2010. Climate in the region of origin and
destination choice in outbound tourism demand. Tourism Management. 31(6).pp. 744-753.
Frechtling, D., 2012. Forecasting tourism demand. Routledge.
Goh, C., 2012. Exploring impact of climate on tourism demand. Annals of Tourism Research.
39(4).pp. 1859-1883.
Gössling, S. and et. al., 2012. Consumer behaviour and demand response of tourists to climate
change. Annals of Tourism Research. 39(1).pp. 36-58.
Hamilton, J. M. and Tol, R. S., 2007. The impact of climate change on tourism in Germany, the
UK and Ireland: a simulation study. Regional Environmental Change. 7(3).pp. 161-172.
Holloway, J. C., 2009. The Business of Tourism. 8th Ed. Longman
Hong, W. C., 2011. SVR with hybrid chaotic genetic algorithms for tourism demand
forecasting. Applied Soft Computing. 11(2).pp. 1881-1890.
Lin, T. P. and Matzarakis, A., 2008. Tourism climate and thermal comfort in Sun Moon Lake,
Taiwan. International Journal of Biometeorology. 52(4).pp. 281-290.
McKercher, B., Chan, A. and Lam, C., 2008. The impact of distance on international tourist
movements. Journal of Travel Research. 47(2).pp. 208-224.
Moutinho, L., 2011. Strategic management in tourism. CABI.
Ng, S. I., and Soutar, G. N., 2007. Tourists’ intention to visit a country: The impact of cultural
distance. Tourism Management. 28(6).pp. 1497-1506.
Ouerfelli, C., 2008. Co-integration analysis of quarterly European tourism demand in
Tunisia. Tourism Management. 29(1).pp. 127-137.
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Serquet, G. and Rebetez, M., 2011. Relationship between tourism demand in the Swiss Alps and
hot summer air temperatures associated with climate change. Climatic Change. 108(1-2).pp.
291-300.
Sharpley, P., 2006. Travel and Tourism. 1st Ed. Sage Publication
Song, H. and et. al., 2010. Tourism demand modelling and forecasting: how should demand be
measured?. Tourism Economics. 16(1).pp. 63-81.
Song, H. and Li, G., 2008. Tourism demand modelling and forecasting—A review of recent
research. Tourism Management. 29(2).pp. 203-220.
Stepchenkova, S. and Eales, J. S., 2011. Destination image as quantified media messages: The
effect of news on tourism demand. Journal of Travel Research. 50(2).pp. 198-212.
Tribe, J., 2005. The Economics of Leisure and Tourism: Environments, Markets and impacts. 3rd
Ed. Butterworth- Heinemann.
Wang, Y. S., 2009. The impact of crisis events and macroeconomic activity on Taiwan's
international inbound tourism demand. Tourism Management. 30(1).pp. 75-82.
Online
Cleanthous, P., 2008. Determinants of Tourism Demand in Cyprus. [pdf]. Available through: <
https://www.ucy.ac.cy/erc/documents/DOP07-08.pdf >. [Accessed on 4th November 2016].
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Philippines: An Augmented Gravity Model Approach. [pdf]. Available through: <
https://mpra.ub.uni-muenchen.de/55294/1/MPRA_paper_55294.pdf >. [Accessed on 5th
November 2016].
Lucy, W. K. N., 2014. AN ANALYSIS OF INTERNATIONAL TOURISM DEMAND FOR
KENYA. [pdf]. Available through: <
http://ir-library.ku.ac.ke/bitstream/handle/123456789/10940/An%20analysis%20of
%20international%20tourism%20demand%20for%20Kenya.pdf?sequence=1&isAllowed=y
>. [Accessed on 3rd November 2016].
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