Impact of Inflation on Tourism Industry: Research Analysis

This research project investigates the impacts of inflation on the tourism industry, economy, and business operations. It uses a qualitative research analysis to evaluate both positive and negative effects. The report identifies that inflation can decrease the purchasing power of currency, increase inequality, and affect business costs. To mitigate negative impacts, businesses can examine their product mix, identify products with inelastic demands, and develop sensitive communication strategies for price increases. The research methodology employs Saunders Research Onion, including positivism philosophy, deductive approach, and survey strategy, using secondary data for analysis. The conclusion highlights the need for businesses to adapt strategies, manage costs, and leverage market analysis to overcome challenges posed by inflation, ensuring operational effectiveness and stability.

Research Project
(Impacts that Inflation can have on tourism
industry and solutions that can be
implemented to ease the negative impacts)
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Abstract
Inflation is a term that indicates the rise in the prices of most services as well as goods on a
common or day-to-day basis for instance housing, food, clothing, consumer staples etc. It also
have direct impact on the cost of living in a particular country. Within this research project, the
impact of inflation on economy, business and tourism is going to be analysed including research
Methodology, Gantt Chart, limitations, etc.
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Table of contents
Abstract ...........................................................................................................................................2
Introduction......................................................................................................................................4
Research Aim.........................................................................................................................4
Research Objectives...............................................................................................................4
Research Questions................................................................................................................5
LITERATURE REVIEW................................................................................................................6
Theme 1: Impact of Inflation on economy.............................................................................6
Theme 2: Impact of Inflation on Busines...............................................................................6
Theme 3: Impact of Inflation on Tourism..............................................................................7
RESEARCH METHODOLOGY.....................................................................................................8
CONCLUSION..............................................................................................................................10
Limitations of the Research...........................................................................................................11
References......................................................................................................................................12
Online.............................................................................................................................................12
Appendix .......................................................................................................................................13
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Introduction
The term inflation basically measures the average change in the price of commodities and
services over a time period. In addition to this, it also indicates a decrease in the purchasing
power of a unity of a nation’s currency. In addition, inflation is a broad measure that includes a
significant rise in the cost of living and overall commodity prices in a particular economy
(Abramova, Dubova and Maslennikov, 2018). In addition, it has been determined that the
customer price index and the wholesale price index are two commonly used inflation indices. In
addition, it has been emphasized that inflation can be viewed positively or negatively. Along
with the rate of change, inflation can be greatly viewed positively or negatively depending on the
individual perspective. The tourism industry's impact on inflation is adequately discussed in this
report. In addition, this report discusses significant solutions as well as negative effects that can
be mitigated. The report also mentions a variety of events that lead to inflation, including global
events that result in significant increases in interest rates. Inflation can occur for a variety of
reasons, including an increase in the quantity of money available for purchase or the printing or
distribution of additional cash to citizens of a particular economy. Inflation is also primarily
caused by this increased pressure on the economy's supply and demand sides (Balli, Ghassan and
Jeefri, 2020). This report's primary objective is to examine the typical impact of inflation on the
tourism industry and provide significant solutions to mitigate its negative effects. In addition,
this report discusses, supported by government statistics reports, the valuation of statistics to
determine inflation and information stating the measured impact of inflation on SME. In
addition, qualitative research analysis is discussed in this study. that further aids in evaluating the
positive and negative effects of inflation on tourism industry organizations.
Research Aim
“To analyse the impact of inflation on torusim industry and identification of solutions that can be
implemented to ease the negative impacts”
Research Objectives
 To determine the impact of Inflation on economy
 To understand the impact of Inflation on business
 To analyse the impact of Inflation on tourism
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Research Questions
 What is the impact of Inflation on economy?
 Explain the impact of Inflation on business.
 What is the impact of Inflation on tourism?
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LITERATURE REVIEW
Theme 1: Impact of Inflation on economy
As per the viewpoint of the Williams (2022), the inflation has the negative impact on the
economy as it increases the inequality in the country such as poor become more poor which leads
to enhance people in below poverty line. It also decreases the monetary value of the currency in
international market so the country exports their product in less value and import in more money
(Ghosh, 20200). In the country the purchasing power of the people is less during the time of
deflation as well as there are the condition of more unemployment, poverty and less development
of the country. The debt of the country is increase in this time in order to the needs of people for
their survival.
Theme 2: Impact of Inflation on Busines
 Costs to businesses of Inflation
As per the view of Lee (2021) market inflation has immense impact on businesses.
Inflation leads to increase in prices of the commodities and services which are needed by any
enterprise for completing its daily operations. This leads to increase in price of raw materials,
manufacturing and overhead costs. The rising costs faced by businesses because of inflation can
be reduced if the entire cost rise is transferred to consumers by raising the price of finished goods
and services appropriately (Sahni, Nsiah and Fayissa, 2021). Despite this option. Often
businesses absorb the costs related to inflation as rising prices of the products or services of the
organization suddenly can lead to loss of consumers.
 Actions taken by businesses to minimise the effect of Inflation
There are different ways through which businesses can prepare themselves to face the
negative impacts of inflation on costs, profitability and daily activities. Firstly, it is important for
businesses to examine their product mix by in context of changes in consumer demand and other
external factors. This review of product portfolio enables organizations to minimize costs b6y
reducing products with low performance (Sun and Lv, 2021). On the other hand, businesses can
also identify products with inelastic demands, price mark up and segments with low price
sensitivity (How inflation impacts different businesses, 2021). Developing sensitive and
intelligent communication content to increase product prices where necessary without
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dissatisfying consumers is another way to maintain stable profitability and retain consumers
during inflation.
Theme 3: Impact of Inflation on Tourism
According to Statista Research Department (2022) inflation had a significant impact on
the hospitality industry in the tourism sector. This rate not only made it harder for businesses to
run their operations, but it also made them more vulnerable to supply chain issues. In addition, it
has been determined that inflation has had an impact on the day-to-day operations of businesses
in a variety of industries. The inflation had a number of serious effects, but it also had some
positive effects on businesses. Tourism organizations can benefit from proper analysis of their
business operations and align them with the market's current trends (Lourenço, Gouveia and
Rua, 2021). Organizations in this sector can take advantage of numerous opportunities provided
by the inflationary period to ensure a favourable impact, such as an increase in investment return
as investors in entrepreneurs receive investments for productive activities.
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RESEARCH METHODOLOGY
Research methodology is the third chapter of the research project which facilitates in the
process of collecting as well as analysing detailed data in relation to the topic. In context to the
current investigation, there is use of Saunders Research Onion which covers various components
of research methodology (Park and Cho, 2022). It includes different elements under it like
research philosophy, approach, strategy, choice of methods, time horizon, data collection and
analysis and many more. Research philosophy: Here the world opinion and understanding through which the study
will be finished is identified. Positivism and Interpretivism are the chief alternative which
can be adopted for completing the investigation (Wamboye, Nyaronga and Sergi, 2020)
(Wong and Lai, 2021). In this research the selected research philosophy is selected to
collect and analyse the data. Research approach: In this part of the investigation the deductive investigation is
utilized out of the options of deductive investigation and inductive investigation. This is
advantageous because it helps complete numerical investigation and determine
relationship with various factors. Research Strategy: This part of the strategy looks at the strategic options used for the
research. Here the survey strategy is used because it helps collect numerical data in an
inexpensive manner. Choice of methods- It refers to the techniques and tools which is used by the researcher
in order to collect analyse and evaluate the data to complete the research work. The two
type of research method like qualitative and quantitative method. In this project the
investigator collects quantitative method in order get numerical information which is cost
and time effective to provide reliable information to the readers. Time horizon- It refers to the time which is needed to conduct along with complete the
research work. In this the researcher use cross section time horizon method which helps
them to complete the research work in less time. Data collection and analysis- The researcher collect secondary data in order to provide
accurate information to the readers so they use it in future for gaining better
understanding about the topic.
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 Sampling: There are two methods of sampling such as probability and non-probability
method. The current researcher used probability sampling method in which they choose
respondents through random selection method. It helps in avoiding biasses in
respondents.
 Ethical Consideration: The researcher will use Data Protection Act so that the data
collected by researcher will not get misused. The researcher will take the consent of
respondents which means the researcher will aware their respondents that they are the
part of the research and their responses will help the researcher to accomplish the
research. The researcher will not harm mentally and physically to any respondent during
research
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CONCLUSION
According to the report's analysis described above, inflation has both positive and negative
effects on a business organization's growth and performance. In the context of the tourism
industry, inflation had a significant impact on businesses in this industry. However, in order to
take advantage of the opportunities presented by inflation, businesses must identify significant
opportunities. In order to avoid having their customers and employees negatively impacted by a
higher interest rate, businesses must also implement efficient strategies to effectively manage the
inflection. By utilizing resources and the cost of input to smooth out prices when input costs are
high, cyclic business organizations can carry out their operations without significantly affecting
their financial resources. In addition, this business needs to focus on input costs and technology
for skilled labour to ensure that inflation does not affect its entire operation due to a lack of
workers. Additionally, overcoming inflation will be made possible by making use of market
analysis to carry out operations and evaluate market issues. The situation of inflation has many
severe effects on SME, and in order for businesses to overcome them, they must employ
solutions, strategies, skilled labour, resources, and methods to deal with the inflation period.
Companies can operate effectively and positively with this assistance without experiencing any
significant disruptions to their business operations or performance.
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Limitations of the Research
This research has a wider scope where a learner understands the role and importance of
crises management so that they can apply effective strategies to the problems. The limitation of
this research is that it consumes resources such as time and cost to investigate materials related to
the topic.
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References
Abramova, M.A., Dubova, S.E. and Maslennikov, V.V., 2018. The role of the monetary policy in
tourism industry development. In Financial and Economic Tools Used in the World
Hospitality Industry (pp. 63-66). CRC Press.
Balli, F., Ghassan, H.B. and Al Jeefri, E.H., 2020. Towards understanding GCC outbound
international tourism. Journal of Policy Research in Tourism, Leisure and Events, 12(2),
pp.142-151.
Ghosh, S., 2020. Inbound Australian tourism demand from Asia: A panel gravity model. Journal
of Economic Studies.
Lourenço, N., Gouveia, C.M. and Rua, A., 2021. Forecasting tourism with targeted predictors in
a data-rich environment. Economic Modelling, 96, pp.445-454.
Park, B. and Cho, J., 2022. How does grade inflation affect student evaluation of teaching?.
Assessment & Evaluation in Higher Education, pp.1-13.
Sahni, H., Nsiah, C. and Fayissa, B., 2021. The African economic growth experience and
tourism receipts: A threshold analysis and quantile regression approach. Tourism
Economics, 27(5), pp.915-932.
Sun, J. and Lv, X., 2021. Feeling dark, seeing dark: Mind–body in dark tourism. Annals of
Tourism Research, 86, p.103087.
Wamboye, E.F., Nyaronga, P.J. and Sergi, B.S., 2020. What are the determinants of international
tourism in Tanzania?. World Development Perspectives, 17, p.100175.
Wong, J.W.C. and Lai, I.K.W., 2021. Gaming and non-gaming memorable tourism experiences:
How do they influence young and mature tourists’ behavioural intentions?. Journal of
Destination Marketing & Management, 21, p.100642.
Online
Williams. G., 2022. Why Is Inflation Bad? 3 Effects Of Inflation. [Online]. Available
Through:<https://www.forbes.com/advisor/personal-finance/why-is-inflation-bad/>
How inflation impacts different businesses, 2021. [Online] Available through
< https://conjointly.com/blog/inflation-impact-on-businesses/>
Statista Research Department, 2022. Impact of inflation on travel and tourism worldwide -
statistics and facts. [Online] Available through <https://www.statista.com/topics/9662/impact-of-
inflation-on-travel-and-tourism-worldwide/>
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Appendix
Gantt Chart
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