Impact of Tourism on GDP and Foreign Currency Reserves

The travel and tourism industry has significant economic, environmental, and social impacts on host countries. The positive impacts include the growth of GDP, foreign currency inflow, and job creation. However, there are also negative impacts such as cultural homogenization, pollution, and ecological imbalance. To minimize these negative impacts while maximizing the positive ones, government authorities need to develop strategies that promote responsible tourism practices.

Travel and Tourism
Sector
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TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1.1 Historical development in the travel and tourism sector ......................................................3
1.2 Structure of the travel and tourism sector..............................................................................5
TASK 2............................................................................................................................................7
2.1 The functions of government, government sponsored bodies and international agencies in
travel and tourism sector..............................................................................................................7
2.2 Influence of local and national economic policies over travel and tourism sector................8
2.3 Implications of travel and tourism sector in different countries............................................9
TASK 3............................................................................................................................................9
3.1 Factors that affect the demand of tourism..............................................................................9
3.2 Ways in which supply has changed to meet the effects of demand.....................................10
TASK 4..........................................................................................................................................11
4.1 Positive and negative economic, environmental and social impacts of tourism..................11
4.2 Strategies that can be used to minimize the negative impacts while maximizing the
positive impacts.........................................................................................................................13
CONCLUSION..............................................................................................................................13
REFERENCE.................................................................................................................................14
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INTRODUCTION
Travel and tourism sector is one of the most important contributors of world economy.
Tourism is determined as a complex phenomenon which is conceptualized at several levels. It is
also termed as a temporary leisure migration across international boundaries (international
tourism) or within the boundaries of a particular country (domestic tourism) for different
objectives. In the contemporary era, there is significant changes addressed in various activities
associated with the travel and tourism because which are focusing not only on recreation and
leisure activities but also education, business objectives, health and fitness purposes, sports,
entertainment and etc (Lima and Martins, 2012). All these elements play important role in the
growth and development of tourism related operations and practices. This present report is
carried out detail assessment of different aspects of travel and tourism such as nature, growth and
impact of national policies. This report also presents historical development of travel industry in
UK. Furthermore, it also determines the structure which creates huge impact on different
operations associated with travel and tourism business.
TASK 1
1.1 Historical development in the travel and tourism sector
Importance of Travel and tourism sector has significantly increased in all over the world.
This is because it significantly contributes in the economic growth and development of country.
It also provides an opportunity to public authorities in order to increase employment, foreign
reserves within country (Spencer, 2014). In the context of travel and tourism business, London is
addressed as a one most important tourist destination that influences world tourism sector.
Assessment of historical development of tourism has found that Grand Tours were firstly
scheduled by the British elite class or upper class that are associated with the big business houses
and top families of UK during the period of late 16th and early 19th centuries. It plays important
role in the growth and development of travel and tourism related activities in the all over the
world. As per the different studies, it is analysed that continent of Europe and notably England
play has been identified as key driver of industrial tourism (Revolution and the growth of
industrial society, 1789–1914, 2016). Furthermore, it is evaluated that mass tourism which is an
important element of travel and tourism sector was initially commenced in England at the second
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half of nineteenth century. Growth of mass tourism has been increased as a result of mainly two
specific reasons: first reason is the development in the transportation technologies or industrial
revolution, whereas second are the individual efforts of an English entrepreneur such as Thomas
Cook. In this context, it has been found that by developing an appropriate combination of the
steam train and ship for the transportation, Thomas Cook has developed several international
package tours to three destinations that include Far East, India and America in 1862. By the year
1897, Thomas Cook was sold tour packages to more than 20,000 tourists annually (Sezgin and
Yolal, 2016).
In the modern area, London tourism is identified as one of the most important parts of
world trade along with tourism. Furthermore, various authorities have developed various
standards in order to promote tourism in UK. It plays an important role to enhance popularity of
different palaces and monuments such as Buckingham Palace, the Victoria and Albert Museums,
Tower of London, British Library and etc. These places are being addressed as the most popular
destinations of London (Nair and Hussain, 2013). After the industrial revolution, there has been
significant growth addressed in number of middle class people along with their income that have
resulted high demand of tourism related services and offers.
Evaluation of current trends of tourism business has found that technology is identified as
the key driver in overseas tourism market along with domestic tourism activities. In this context,
London has made an extensive use of new technologies and science for this industry through
which different companies associated with tourism business offer wide range of services related
to accommodation, transportation, etc. as per the income and special requirement of people
(Cooper and Hall, 2008). It plays important role in the growth and development of tourism sector
in the UK.
Evaluations of key drivers of tourism sector which are influenced by industrialization are
explained below: Change in social life style of people: Industrialization has played important role to
influence companies in the overseas markets. This thing increases employment rate and
income of people. It creates a new social class like middle class which is having
appropriate funds for spending vacation at different destinations of the world.
Globalization has played important role for the establishment of communication among
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people who belong from different culture. It creates huge impact on lifestyle of people
that plays important role in growth of tourism business. Technological advancement: As a result of industrialization, every organization tries to
assess competitive edge over other company by managing different research and
development activities in the field of science and technology (Hudson, 2008). It provides
an opportunity to tourism companies for offering high quality and unique services to the
visitors. Evolution of jet aircraft, computer programming and other technologies has
helped companies for rendering more comfortable services with safety as per the special
requirement of people.
 Infrastructural development and innovation: It is identified as the most important
element of tourism development. This is because it ensures safety and security of visitors
along with their comfort. In this process, increase in connectivity among top destination
in all over the world and development of high speed city transportation medium such as
Metro etc (Khosrowpour, 2002). Have played important role to attract tourist towards
particular destination.
1.2 Structure of the travel and tourism sector
Travel and tourism sector is a combination of various other industries that are worked
together for offering wide range of services to the visitors. In this context, some important
elements of travel and tourism sector are explained below:
Tour management
It includes various individuals that are focused on establishing coordination among
various aspects of tourism such as transportation, hotels, outing etc. Tour operators and Travel agents: Tour operators are playing important role for
controlling different aspects of tourism management. These companies or individual
agents are focused on establishing connection with various other tour operators and
hospitality firms for rendering different services such as transport facilities, financial
services, accommodation as well as other ancillary services. These individuals provide all
kinds of information about several available services and their costing as per the needs of
consumers.
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 Ancillary services: It includes various other supporting services which are considered by
travel and tourism sector while developing a tour package. It consists of a combination of
financial services, insurances, marketing companies, guide services, media services along
with private training service. In addition to that, tour managers also develop various
strategies for handling wide range of legislation associated in overseas tourism such as
passport and visa services etc.
Accommodation
It is most important aspect of tour management process which is having direct impact on
the cost and pricing of tour package. In this, tour operator arranges accommodation services for
visitors through hoteliers, villas, resorts, cottages and apartments as per the consumer's interest
(Swarbrooke, 2012). In the present business scenario, accommodation service plays important
role to attract external visitors
Transportation
It is most crucial segment in tour operations. This is because there are significant
variations addressed in airline rules and regulations in different countries that affect the costing
of tour package. In addition to that consideration of cost of other transportation medium is also
essential for handling different aspects of tour management. In London, government authorities
offer several medium of transportation which is evaluated below: Air travel: It is most quick transportation medium to established connectivity among
international and domestic tourist destinations. Efficient air transportation services is
played important role to attract external visitors from all over the world (Peters, 2013). Road transport: Basically, for the domestic tourism, road transport has been the
adventurous option for the travelers. It is also a very cost effective medium of
transportation. Cruise travel: In the recent times, operators are also offer cruise services to visitors so as
they are able to assess unique and creative hospitality services that would attract visitors
to revisit certain tourist destination.
Attractions
In the context of travel and tourism sector, wide range of natural and manmade
attractions are playing important role in order to attract external visitors In the context of UK,
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there are several natural resources such as beautiful beaches, mountains, eye capturing natural
view and spectacular river coast along with wild life playing important role to attract visitors
from all over the world (Zhao, 2010). In addition to that, different kind’s manmade attractions
are greatly influencing external visitors such as palaces in UK, forts, museums, zoo etc.
TASK 2
2.1 The functions of government, government sponsored bodies and international agencies in
travel and tourism sector
For managing tourism operation in UK, the public authority of UK has established
Tourism Act 1969. With reference to this act, The British Tourist Authority (BTA) and the
English Tourism Council (ETC) have now been merged with a new authority such as
VisitBritain. The primary objective of this Act’s was to co-ordinate all the organizations for
rendering best services to visitors. In addition to that Transport Acts 1980 and 1985 have ended
licensing regulations that are affecting express coach routes and tours of over 30 miles. It has
increased the competition between National Bus (then a public company) along with the private
companies. It supports private companies to operate in any route. In addition to that Package
Travel, Package Holidays and Package Tours Regulations 1992 has played important role to
control the operations of UK tour operators that are offering package holidays which have been
subject to the Package Travel Regulations (The travel and tourism industry. 2016). The
regulations set out for determination of tour operators’ responsibilities towards their and
customer's rights on breaching of the contract.
The Department for Culture, Media and Sport is monitoring tourism related activities in
UK. It manages different functions at three levels: National, regional and local. It develops
various strategies in order to promote tourism with the help of various other organizations such
as Visit Britain, Visit Wales, Visit Scotland along with the Northern Ireland Tourist Board
(Pawitra, 2003). It also formulates various policies and regulations to manage appropriate
coordination between private and public sector organizations to attract external visitors from all
over the world. In addition to that Public authority has developed several Tourist Information
Centres in each town through which different operations related to tourism are managed such as
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promotional brochures, online websites, accommodation and booking services, sports and leisure
centres, theatres, museums and art and craft gallerias.
In the context of tourism business, the UNWTO agency is also responsible for economic
growth and promotion of tourism sector. Apart from that The World Travel & Tourism Council
(WTTC) is identified most important group of different business leaders associated with the
Travel & Tourism industry (Lima and Martins, 2012). It plays important role in order to control
operations of tourism sector in all over the world. WTTC works to raise awareness of Travel &
Tourism as one of the world's largest industries which is supporting 277 million jobs as well as
generating 9.8 per cent of world GDP. It supports various activities related travel and tourism in
different parts of world as per the change in interest of people.
2.2 Influence of local and national economic policies over travel and tourism sector
The public authority of UK develops various policies in order to control economy along
with the growth of country. In this context, monetary and fiscal policies have played most curial
role in UK. These policies are also having significance impact on the overall growth and
development of tourism. For example: Monetary policy of country controls flow money within
country by controlling interest rates (Sezgin and Yolal, 2016). It affects the business expansion
plan of different companies which are working in travel and tourism business such as hotels,
aviation companies, tour operators and etc. Therefore, cost of finance is having significant
impact on the business expansion plan of different companies in UK.
In similar way, fiscal policy of government control the taxation rates within economy that
is having direct impact on the cost of different services associated with travel and tourism
business. In the context, different companies related to tourism business has to manage
significant change in business operations along with the pricing of services with reference to
fiscal or taxation policy of public authorities of UK (Nair and Hussain, 2013). This is because it
influences the profitability of companies which are working in travel and tourism business.
Furthermore, the public authority has developed various policies for battlement of
tourism sector in UK. In this process, the government has managed several reforms in star
ratings of different companies and hotels groups. In this context, Government is trying to restrict
business operations of corral tourism firms in England into joining an official rating scheme.
Further decisions will be made on whether and how to modernise, reduce or close the existing
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state-sponsored scheme to the industry itself with the help of the newly-refocused VisitEngland
scheme. This approach will be found very effective for improving service quality.
2.3 Implications of travel and tourism sector in different countries
The demand of tourism services for particular tourist destination is greatly influenced by
several factors such as political stability, international trade agreements etc. In this context, the
political stability or instability is considered as most important motivator of external visitor. This
is because if the political scenario of a country is not good and unsafe then it influences the
feeling of distrust among visitors from all over the world (Khosrowpour, 2002). On the other
hand, if there is stability in political environment then visitors from all over the world attract
towards particular destination. Therefore, Switzerland is identified as one the most popular
tourist destination of the world. This is because Switzerland is having strong an appropriate
political system and public authorities have developed various policies in order to protect the
interest of visitor. All these policies ensure safety and security of tourists with better quality of
tourism services. In similar way, public authority of UK has managed a strong political system
and government has maintained strong relationship with various other European and other
countries in order to attract external visitors.
In the contrary, the political instability or unfavourable political environment is hampered
the tourism related activities in particular city (Swarbrooke, 2012). For example: In Pakistan,
overseas tourists avoids to visit Pakistan. This is whole economy is threatened by wide range of
terrorist attacks and political instability. It leads safety and security related issues among visitors.
It hampers different activities related to growth and development of tourism within politically
unstable nations. In the contrary, developing countries like India and Nepal with a stable political
system support tourists are offering wide range of benefits and offers in order to attract external
visitors. It supports visitor to assess low cost services tourism services in these countries.
TASK 3
3.1 Factors that affect the demand of tourism
The management of TUI group formulates various strategies and tour packages by
considering several factors. In the present tourism trends, there are several factors examined
below affect the demand of tourism services:
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 Emerging economies: India and China have been emerged as fastest growing economies
in all over the world. It influences various overseas or multinational companies for
expansion of business in these countries (Peters, 2013). This thing influences requirement
of tourism services among external visitors for the business purpose so as managers and
business leaders of various international organization are regularly visiting these
countries. Therefore, emerging economies have played important role in order to attract
external visitors. Demographic: It determines age group, lifestyle and income level of people. There is
significantly increment addressed in demand of tourism services among the young age
people. This is because young age people always want to experience some places and
adventures. In addition to that increase in income of middle class people has influenced
them to spend leisure time in different locations of the world. In addition to that Social
factors also affects the preferences and choices of people related to tours and trips (Zhao,
2010). Therefore, it can be stated that the lifestyle, culture and interest of people is being
identified as most important factor that influences the demand of tourism services. In this
regard, tour operators have to consider special needs and requirement of people that is
having great impact on the demand tourism services.
 Political: By considering benefits of tourism, public authorities have developed wide
range of policies for development and growth of tourism sector. This is because it
significantly contributes in nation GDP. In national policy framework, these sectors play
a crucial role to attract external visitor from all over the world.
3.2 Ways in which supply has changed to meet the effects of demand
There is the significant variation addressed among different services and tour packages
which are offered by different agents and tour operators. In order to improve service quality, the
management of different tour company follows a structured process to render best services to
consumers (Pawitra, 2003). It is also influenced by change in supply and demand. In this context,
the management of TUI group considers below mentioned element for managing supply and
demand: Seasonality: It is one of the most important elements that influences the demand and
supply of tourism services. This is because most of organisation related to hospitality
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business are increased the prices of different services which are provided by them.
Therefore, tour operators have to manage pricing of different packages as per the costing
of other services (Lima and Martins, 2012). In this regard, TUI group has developed
various policies and regulations in order to offer best services to consumers within good
price in particular tourist season. Management of Travel and transport: By considering the interest and lifestyle of
consumers, TUI group offers different kinds of transportation medium that includes a
combination of air travel, road transport, rail journey and cruise journey. Apart from that
TUI group also arrange carrier cart in the form of electronic traditional cars for visiting of
various historical places (Spencer, 2014). In addition to that operators also provide wide
range facilities associated with other transport services such as visiting particular
destination for business interest as well as various other objectives such as sport events,
educational tours. In this context, medical tourism is being identified as most important
element of tourism sector. Therefore, tour operator different kind of transportation
channels such as buses, cabs and etc.
 Accommodation: The most important section of tour operations management is the
management of accommodation as well as food services. With reference to different
needs of customers, TUI group is offering a verity of choice in hotels services as per their
requirement and budget (Sezgin and Yolal, 2016). Apart from that TUI group offers a
verity of tour packages by considering different accommodation facilities such as hotels,
inns, villas, cottage houses, etc.
TASK 4
4.1 Positive and negative economic, environmental and social impacts of tourism
The growth in tourism industry within particular country leads wide range of positive and
negative implications. These implications are made on economy, environment and society of
company. The evaluation of positive and negative implications is carried out below:
Factor Positive implications Negative implications
Economic In the present era, the demand of travel
and tourism services has been
Cross border tourism has played
important for increasing the foreign
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significantly increased. Therefore the
Travel and tourism sector is termed as
most important contributors in overall
economic growth, development and
GDP. This is because it formulates
several employment opportunities and
encourages overseas invest from all
over the world (Nair and Hussain,
2013). It leads several positive impact
in the from growth in GDP of country
and inflow of foreign currency. It also
increases the value of foreign reserves
that support in international trade
operations.
exchange earnings and revenue
generation but it may certain adverse
implications on economy. This is
because when international tour
operators manage different operation
in certain city then it could increase
the chances of outflow of currency
(Cooper and Hall, 2008). In addition
to that if the number of outbound
visitors is higher than inbound
visitors that government officials
could address reduction in foreign
reserves.
Environmental It plays important role in research and
development of various natural
resources such as wildlife, water
bodies, etc. This is because growth in
tourism related activities has provided
opportunities to external researcher to
carry out investigation the wild life and
other natural resources (Hudson,
2008). This investigation assists local
authorities in assessment of various
environmental issues such as increase
in pollution, safety of wild life etc.
Increase in number of visitors in
forest and natural leads adverse
implication of natural assets in the
form of poaching, illegal mining in
forest areas. It also creates ecological
imbalance.
Social It is one the most crucial aspect of
tourism. This is because when people
travel in domestic and international
There have been several adverse
implication identified on the society
of host country. This is because
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level for tourism purpose then it
increases the personal interactions of
visitors with the people of host
destination (Khosrowpour, 2002). This
interaction has found very effective to
increase the awareness among visitors
about culture and heritage of host
nation. It increases respect among
visitors and people of host country
about the culture of each other.
interaction among people of host of
country and external visitors could
local citizen to adopt foreign culture
so as it could local culture and
traditions (Swarbrooke, 2012). It also
increases the chances of
commercialization of actual heritage
of country.
4.2 Strategies that can be used to minimize the negative impacts while maximizing the positive
impacts
For minimizing the negative impacts and maximizing the positive impacts of tourism,
some important strategies are explained below that could be adopted by public authorities: Economic impact: The public authority of UK will able to enhance positive impact of
tourism by attracting more visitors in different part of world. In this context, management
needs to adopt appropriate marketing strategies for promotion wide range of tourist
destination in London. In addition to that government has to develop appropriate
strategies for managing the balance of payment (Peters, 2013). Environmental impact: Public authorities of UK require developing various authorities
and set of rules and regulations for ensuring safety and prevention of damage of
environment and natural places from tourism activities.
 Social: In order control social implication, government has to develop various different
kinds of programs and campaigns associated with positive and negative aspects of
different culture, telecast them on TV and other media platforms through which
awareness of people can be enhanced so as local citizen will be able to protect their
culture (Sezgin and Yolal, 2016) .
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CONCLUSION
As per the above assessment, it can be stated that travel and tourism industry is
considered as an important tool for generation of revenue and foreign currency for particular
organization. This study has addressed that internet technology plays important role in overseas
tourism practices. This report has found that tourism industry leads various positive and negative
implications on host country so as government authorities have to develop appropriate strategies
for minimizing the negative impact.
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REFERENCE
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Khosrowpour, M., 2002. Issues & Trends of Information Technology Management in
Contemporary Organizations. Idea Group Inc.
Lima, J. and Martins, A., 2012. Mobility among Latin American migrants: The case of Bolivians
in São Paulo and Brazilians in London. Employee Relations. 34(6). pp. 594 – 612.
Nair, V. and Hussain, K., 2013. Conclusions: contemporary responsible rural tourism
innovations: What are the emerging contemporary rural tourism innovations and how are
they enhancing responsible tourism practices in Malaysia. Worldwide Hospitality and
Tourism Themes. 5(4). pp. 412 – 416.
Pawitra, I., 2003. Tourist satisfaction in Singapore – a perspective from Indonesian tourists.
Managing Service Quality: An International Journal. 13(5). pp. 399–411.
Peters, M., 2013. Of Other Thoughts: Non-Traditional Ways to the Doctorate. Springer Science
& Business Media.
Spencer, J. A., 2014. Tourism and technology in the global economy: challenges for small island
states. Worldwide Hospitality and Tourism Themes. 6(2). pp. 152 – 165.
Swarbrooke, J., 2012. Leisure Marketing. Routledge.Henry, C., 2006. Periscopic media tour.
Strategy & Leadership. 4(34). pp. 56-60.
Zhao, L., 2010. New co‐operatives in China: why they break away from orthodox co‐
operatives?. Social Enterprise Journal. 6(1). pp. 35–48.
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