Impact of Environmental, Economic, and Social Factors on Tourism in Edinburgh

The travel and tourism sector in the UK has a significant impact on the economy, environment, and society. To minimize the negative effects of economic downturns, import controls, environmental degradation, and social factors, strategies such as encouraging local production, providing subsidies, educating host communities, and promoting cultural heritage can be implemented.

TRAVEL AND
TOURISM
SECTOR

TABLE OF CONTENTS
Introduction......................................................................................................................................3
Task 1...............................................................................................................................................3
1.1 Key historical developments in the travel and tourism sector...............................................3
1.2 Structure of the travel and tourism sector..............................................................................5
Task 2...............................................................................................................................................6
2.1 Function of government, government sponsored bodies and international agencies............6
2.2 Affect of local and national economic policy .......................................................................7
2.3 Implications of political change on the travel and tourism sector in different countries.......7
Task 3...............................................................................................................................................8
3.1 Factors affecting tourism demand..........................................................................................8
3.2 Change in supply to meet the effects of demand...................................................................9
Task 4.............................................................................................................................................10
4.1 Economic, environmental and social impact of tourism in Edinburgh................................10
4.2 Strategies that can be used to minimize the negative impacts............................................12
Conclusion.....................................................................................................................................13
References......................................................................................................................................14
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ILLUSTRATION INDEX
Illustration 1: Structure of Travel and Tourism Sector....................................................................6
Illustration 2: Edinburgh City........................................................................................................12
3

INTRODUCTION
Travel basically refers to as the movement of people between distant geographical
locations which involve the travel by foot, automobiles or through other means of transport. On
the other hand tourism is the travel for pleasure along with that it involves the business of
attracting, accommodating and entertaining tourist and the business of tour operators. This
industry or sector is the most flourishing sector in present world (Navickas and Malakauskaite,
2015). Further, the revenue earned by this sector helps in increasing the GDP of the country and
that eventually leads to the growth of nation's economy. Moreover, this report describes the
travel and tourism sector of UK and how it has evolved form long period of time. Additionally it
provides the understanding of the environment in which this sector operates its services.
Furthermore, discussion has been made on the history and structure of travel and tourism and
also the impact of government and international bodies on this sector. This report also includes
the description of supply and demand of travel and tourism sector.
TASK 1
1.1 Key historical developments in the travel and tourism sector
Travel and tourism sector is not a present sector in fact this has evolved over many years.
Further, in today's scenario, this industry is the most dynamic industry which has brought many
changes and innovations in the services they are providing from past many years (Perch-Nielsen,
Sesartic and Stucki, 2010). Moreover, there has been lot more historical development in this
sector which are enumerated below:
History
From past thousand years, people used to travel for the purpose of pilgrimage and that
was the only aim of travel for the people. Along with that, warriors used to travel for the purpose
of war and there they used to stay for many days in other locations. Moreover, after some times
upper class people of UK used to visit for the Grand Tours which was an Elizabethan concept
that witnessed the need of development of a professional statesmen and ambassador. This custom
used to flourish from 1660 and this was associated with a standard itinerary. The practice of this
grand tour began in 17th and 18th century until it became a routine (Lee and King, 2009). When
this tour became the routine, a two major factors affect the development of tourism in which one
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was the Industrial Revolution. Post revolution, rural people started moving to urban areas and in
order to assist this travel, the invention of steam engine was done. Earlier people used to travel
by foot or through bicycle. But there was an evolution of modes of transport for the purpose of
assisting the visitors and this mainly happened post industrial revolution. Later on, the
development of Spa also effect the development of tourism sector. The popularity continued in
19th century (Peeters and Dubois, 2010). Mainly for the purpose of spa, there was an evolution of
beach resort. This assist in the accommodation of visitors and the medical professions and
British court helped in popularizing this beach/seaside resort.
Present
This sector is the most dynamic sector in today's world. There is a great amount of
change in this sector which can be understood from the history. The industry has introduced
many innovative service which assist all kinds of tourist. In contemporary time, people used to
visit for all the purposes such as leisure, business dealings, pilgrimage, beach spa, educational
trips, cultural tourism, etc. According to the purposes, the types of tourism have started evolving
that is cultural tourism, adventure tourism, green tourism, Grey tourism, dark tourism, etc.
People these days travel for relaxing themselves from the busy schedule (Scott, de Freitas and
Matzarakis, 2009). In addition to this, people also travel in order to gain information and
knowledge about the history and culture of every nation or locations. In order to assist this travel,
many technological advancement have been introduced such as air travel facility, cruise, road
ways, etc. There are installations of high level of security system so that threats of terrorism and
theft/fraud can be removed. There is a freedom of movement in every nation and due to this
reason, people are visiting more and more. The government of the UK is spending much for the
development of the infrastructure of the the nation so that more tourist can be attracted and
maximum revenue can be earned. The government is assisting for the building of hotels,
restaurants, museums, etc.
Future
As per the past information of the travel and tourism, it can be assessed that there is a
vast development in the travel and tourism sector (Dwyer and et.al., 2009). Thus, its future is
also bright. Apart from the development, industry should also take care that environment and
society is not getting impact due to this development so the sector should focus on the
5

sustainability in order to save and protect the environment. Further, there should be more
advancement in the technology so that people cannot get suffered due to the terrorism attack and
with the threat of security the growth of this industry does not get impacted.
1.2 Structure of the travel and tourism sector
The understanding of the structure of travel and tourism of London is very important
thus, travel and tourism sector plays a significant role in the country UK(Scott, Peeters and
Gössling, 2010). It is because there are many other sectors which are directly or indirectly
depended on it. The structure of travel and tourism industry of London has been described
below:
(Source: Dudovskiy, 2013)
From the above structure, it can be understood that these all businesses togetherly form
the structure of travel and tourism. The various business of several sectors can be enumerated
below:
1. Tourist Attraction: There are many visitors such as Big Ben, London Eye, Tower Bridge,
British Museums etc. are the visitors attraction points which aids in booming the travel
and tourism sector (Hjalager, 2010).
2. Tourism Services: The tour operators such as Thomas Cook, TUI group, etc provide
effective and attractive tour packages In order to attract more and more customers
6
Illustration 1: Structure of Travel and Tourism Sector

towards their organization. Moreover, this sector includes travel agents, tour operators,
etc. which takes the tourist from one location to other. Services of London city are highly
effective as they provide innovative facilities and additional benefits to the visitors.
3. Travel Services: This sector includes the mode of transport which assist the travelers in
traveling from one place to another. This include airlines, railways, cruise, roadways, etc.
these all are assisting this industry from many ways. The people are attracted by cheap
fares of airlines and other mediums of travel (Garín-Muñoz and Pérez-Amaral, 2011).
TASK 2
2.1 Function of government, government sponsored bodies and international agencies
The industry of travel and tourism sector is highly regulated by the government and other
bodies which are sponsored by the government itself. Thus, government and other bodies plays a
major role in the growth of this sector. It is because, people who wish to travel to UK has to take
permission from the government to enter into UK province and further the nation's government
wants to attract the tourist more in order to enhance the production and business of the UK
economy (Kuo and Chen, 2009). Thus, government, other bodies and agencies have played and
are playing functions to enhance this sector which are described as follows:
 Government: UK's government intervene in the travel and tourism sector business
through The Ministries of Tourism and National Tourism Organization. They make and
change different rules and regulations for the safe and secured tourism in the country.
Such as proper investigation of the person who have applied for the visa, proper reference
check so that terrorism attack or theft/fraud does not get arise (Baggio and et. al., 2010).
Along with that, proper security check is also done in order to provide safe and secured
environment to the visitors. Moreover, government also develop the infrastructure of the
country so that large number of tourist, businessman get attracted towards the nation and
invest in the country. Government Sponsored Bodies: National Tourist Boards, Regional Board, Visit Britain,
etc. are the sponsored bodies which are established because for the development of
tourism by conducting research (Cohen, 2004). Development is done through different
aspect for promoting the tourism in the country UK.
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 International Agencies: There are many agencies which internationally regulates the
travel and tourism business. These are UNWTO, IATA and these performs the function
of maintaining peace and harmony in the world. People who are traveling to different
nations should not get suffer by any unfortunate circumstances (Anderson, 2013). They
promote safe, economic and regular air transport. They ensure that there is a high level of
security which helps in promoting the tourism in London.
2.2 Affect of local and national economic policy
The action of government which have an intention to impact the economy of a city or a
country is known as economic policy. Economic policy includes monetary policy and fiscal
policy which involves tax rates, interest rates, inflation/deflation rate, etc. These factors of
economic policy affect the tourism sector in both positive and negative manner.
Positive Affect
If the interest rate, currency exchange rate and tax rate on the tourism sector is low than
people will travel more and the investors will invest more in the country. This will help in raising
the economic condition of the UK (Mason, 2008). Moreover, the revenue earned out of this will
benefit the government as the GDP will get increase and there will be a stability in the currency
exchange rate as there will be more inflow of the foreign currency in the city and country.
Negative Affect
However, these rates have a negative affect as well. If the tax rate is high than people
who are visiting London will have to pay more on the product or service purchased. Thus, due to
this reason they will avoid visiting the UK (Mason, 2008). Thus, tourism sector will get highly
impact as the revenue of the hotels, tour operators, etc will start declining. Moreover, if the
interest rate is high than business travelers will not like to invest in this country and thus
eventually the UK economy will get decline.
2.3 Implications of political change on the travel and tourism sector in different countries
The political environment of every country influence the travel and tourism sector as they
are linked with this sector in one or the other manner. The travel and tourism is affected by the
changes in the political environment. It is because, people who wish to travel to another country
will get impacted by the political instability (Williamson, 2003). If there is no political stability
than people would restrain form visiting such places where they do not get the safe and secured
8

environment. Through this, travel and tourism sector get impacted. Further, the investor will not
get attracted to invest as there is a frequent political changes in the nation. On the other hand,
tour operators who have many offices in other countries also get impacted due to the political
changes. They have to follow the policies of particular government and has to bring changes in
their organizational policies. If there is a cold war between political government of two nations
than people would not be allowed to visit in each others nation. This will how the travel and
tourism sector of different country will get impacted (Talwar, 2006).
If there is political instability than visitors will not feel themselves in the safe, secured
and good environment. Further, there are many countries in the world where tourism comes to an
end due to the reason of political situation even though such countries have the potential
destination for thriving tourism. For example Burma, this country has political issues with USA
and UK. This result is an improper development of tourism and economic sectors. However, this
political instability and changes leads to the positive impact as well on the travel and tourism
sector (Black and Crabtree, 2007). At the time of change in government, due to economic
breakdown currency rates comes down and that result in increase in travelers or visitors to the
country UK. People visit more because the rates become cheaper and this prove to be
advantageous for them.
TASK 3
3.1 Factors affecting tourism demand
In a general term, demand is the desire, willingness of the person to buy a particular good
or service which is assisted by the purchasing power of the person. In an economic term, law of
demand can be described as the other things being constant, if the price of the product increases
or decreases than the demand of the product or services decreases or increases respectively.
Therefore, the price and demand of the product or services is inversely related with each other
(March and Wilkinson, 2009). However, the tourism demand refers to as the desire and
willingness of the visitors to buy or avail the tourism products or services at changing prices
during a particular period of time. Further, this type of demand is essentially useful in
distinguishing among the demand for travel to a destination that is visitor's arrival and
expenditure and the demand for particular tourism related goods and services of TUI Group
within that destination which includes hotel rooms, restaurants meals, trips, etc. Moreover, there
9

are many factors or elements which affect the tourism demand in one or the other manner and
that are described as follows:
 Technological: With the increase in the advancement of technology such as internet have
affected the demand of tourism in TUI Group (Navickas and Malakauskaite, 2015).
Visitors compare the prices of every package and sometimes make the package trip by
themselves. This has reduced the demand of the tour operators and thus TUI has got
impacted.
 Political Instability: Due to the instability in political environment people are less
willing to travel to UK. This has led to the reduction of demand of TUI Group. It is
because people resist to travel to such place where there is political instability as they do
not find a safe and secured environment and they are scared of fraud/theft during that
period of time (Perch-Nielsen, Sesartic and Stucki, 2010).
 Demographic Factors: There is a diverse change have occurred in the demographics
sector. These days, youngsters and older people are visiting more and they have took the
demand of the travel and tourism in completely different direction. In addition to this,
every income group is willing to travel. Thus, the demand of TUI Group has got
increased (Dwyer and et.al., 2009). This factor has a positive impact on the TUI Group.
 Globalization: This factor has a major influence on the tourism demand. The airlines
have become globalized which assist in taking the visitors from one place to another. If
the rates of airline seats are cheap than people will travel more. Further, the hotel brands
have become globalized such as Marriott, Hilton, etc. have its premises in many countries
and the loyal customers wish to accommodate themselves in that hotel wherever they
travel (Hjalager, 2010). TUI Group itself is globalized and thus, it can raise the demand
of visitors in many countries. This is how globalization impact the demand of tourism.
3.2 Change in supply to meet the effects of demand
The fundamental economic concept which help in describing the total amount of a
particular product or services which is available to the consumers is kn won as supply. Further,
the supply in tourism context can be described as an ability of TUI Group to make available the
given services to its customers for satisfying their needs. The demand of tourism is changing and
fluctuating on a routine basis and in order to meet the demand of tourism in UK, TUI Group has
10

to bring changes in the supply mechanism (Kuo and Chen, 2009). Various factors which assist in
changing the supply have been described below:
1. Quality Services: In order to meet the changing demand, TUI Group should focus on
service quality so that demands of the visitors can be met out. Further, they provide all
types of innovative services which facilitate the visitors to have hassle free trip For this
purpose, TUI Group have aimed to provide excellent airlines, hotel services along with
that complementary food services (Anderson, 2013).
2. Tour Operators: TUI Group has planned to merge with other tour operators in a country
in order to bring efficiency in the tourism services so that supply can be made effective
and fluctuating demand can be met out.
3. Accommodations: The hotel industry is growing at a rapid pace and high end services are
provided to the customers or visitors in order to make them feel relaxed and secured
(Cohen, 2004). Moreover, to accommodate all kinds of income group people, there are all
types of hotels available so that moderate income groups can afford to visit the place.
TUI Group has also merged with numerous hotel in order to include the accommodation
in its tour packages.
4. Types of Products: The TUI Group has brought in many innovations in order to meet the
changing demand of the tourism of UK. For instance, company has introduced
customized package in which tourist can make their own package trip and can visit to the
places they wish to travel (Mason, 2008). Moreover, the company has introduced their
own airlines so that the air tickets can be made available to them at lower prices when the
people book the trip with the TUI Group. Along with that they have merged with many
hotels and that is included in the trip they take to.
TASK 4
4.1 Economic, environmental and social impact of tourism in Edinburgh
Edinburgh is the capital city of Scotland which is located in Lothian. It is the seventh
most populous city in UK. There is a population of 464,990 for the city of Edinburgh. This city
is famous as the center of education, particularly in the fields of medicine, Scots Laws, literature,
sciences and engineering (March and Wilkinson, 2009). This city is a home to the Scottish
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Parliament. The summer festival is famous in this city and during that time many visitors arrive
from neighborhood and from other countries. This makes the city very popular in the world.
(Source: Cairn Hotel, 2016)
As it is known that if the tourism increases in the nation than it brings many benefits to
the country, however, this sometimes also bring limitation as well to the local people living
there. Tourism sector of Edinburgh has been impacted in both negative as well as positive
manner. The economic, social and environmental impact have been discussed below: Economic Impact: If the tourism increases than it provides many employment
opportunities to the people of Edinburgh. The local community comes up with several
small and big businesses (Williamson, 2003). Along with that investors also get attracted
to establish their business at the Edinburgh. During the summer festival, generation of
income is highest because many traders from in and around Europe comes and trade
there. However, this also has a negative impact because downturn in the economic
condition, people are less willing to travel to Edinburgh this has caused the decline of
tourism business. With the increase of interest rates and tax rates investors have
withdrawn their investments. Social Impact: The local community learns a lot from the visitors traveling there. This
has helped in raising the standard of living of the city. Moreover, the society has become
well educated so they help in raising the tourism (Kuo and Chen, 2009). They behave
12
Illustration 2: Edinburgh City

properly with the tourist which help in doing repeat business with the visitors. On the
contrary, typical thought process of local community have impacted the tourism in
negative manner.
 Environmental Impact: Global warming and other environmental disasters has led to the
destruction of tourist attractions and other monuments. Due to this reasons, visitors lack
interest in visiting to Edinburgh. Moreover, the regular visit to natural sites assist in
destroying the natural habitats and wildlife so government has banned the visit to such
places (Mason, 2008). This reduces the demand of tourism to Edinburgh. However, the
introduction of Green Tourism has helped in raising the tourism which can prove to be
helpful for the tourism sector to increase their demand.
4.2 Strategies that can be used to minimize the negative impacts
There is a positive and negative impact of economic, social and environmental factors on
the tourism. There are many strategies which can be adopted in order to minimize the negative
impact of these factors on tourism. There is a negative impact of import to enhance the business
in the Edinburgh and this can lead to the outflow of UK currency in other countries of the world.
This issue can be reduced if the government encourage the local traders to start the production
process in own country (Baggio and et. al., 2010). This will enhance the domestic production and
the revenue earned through the tourism sector can be invested in the development of the nations
and their industries. The impact of economic downturn on tourism sector can be reduced by
providing subsidies to the tourism industry so that they can provide discounts to the visitors in
order to increase the travelers number.
Further, increasing environmental issues are also having a negative impact on the tourism
sector. This can be minimized by educating the host community of Edinburgh city about the
environment protection. The local people can be encouraged to involve in the environmental
projects. The negative affect of environment on tourism cannot be vanished but its impact can be
reduced up to a level by involving each person of the society (Lee and King, 2009). Moreover,
the local authority and the government can be encouraged to plan scheme for the purpose of
protection of the natural environment and preservation for the historical and archaeological sites.
This in turn would lead to minimization of negative impacts of environmental factor on tourism
13

industry. Along with that, green tourism can be increased so that the impact of government
policy of environment protection can be minimized.
Moreover, the social impact also has a bad impact on the tourism sector and this can be
reduced by promoting the culture of the city. This is how negative perspective about the society
of Edinburgh can be minimized. For this purpose, government and local authority must fulfill the
needs and demands of local people (Timothy, 2011). Along with that, they should also develop
the infrastructure at the destination points or at tourist attraction points so that visitors can be
attracted.
CONCLUSION
After conducting the study on the travel and tourism sector of UK, it can be concluded
that this industry has a huge environment which includes various types of important sectors for
the development of country and the tourism itself. Moreover, it can also be concluded that this
has became an important industry in both developed and developing countries. Also the demand
of tourism is changing and ion order to meet those demand, supply has also been changed by the
TUI Group. Furthermore, the economic, social and environmental factors and their impacts have
been assessed on the tourism sector of Edinburgh. Various strategies have been laid down for
removing or minimizing the negative impact of these factors.
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