Research Report: Inflation Impacts on Tourism & Mitigation Plans

This report examines the impacts of inflation on the tourism industry, defining inflation and exploring its positive and negative effects. It highlights that while inflation can increase producer profits and investment returns, it also reduces consumer buying power and savings value, particularly affecting lower-income individuals. The report proposes solutions for tourism organizations to mitigate the negative impacts of inflation, including reevaluating profit margins, enhancing output levels, implementing accurate financial planning, and considering alternative pricing models. It also emphasizes the importance of strategic cost reduction, stocking up on supplies, and adapting to new market segments. The report concludes by discussing the inverse relationship between inflation and deflation, suggesting that a controlled level of inflation is preferable to deflation's potentially destabilizing effects on the economy and stock market. Desklib provides students access to similar reports and solved assignments.

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

Table of Contents
Topic: “What are the typical impacts that inflation can have on the tourism industry and what
solutions, to ease the negative impacts, can be implemented?”......................................................3
Definition................................................................................................................................3
Positive and Negative Impacts of Inflation............................................................................4
Solutions that the tourism industry can used for reducing negative influence of inflation which
aims to identify solutions for tourism organisaion for assisting ease inflation pressure. ......5
A Gantt Chart that shows the research tasks and timings of the tasks...................................7
References .......................................................................................................................................9

Topic: “What are the typical impacts that inflation can have on the tourism
industry and what solutions, to ease the negative impacts, can be
implemented?”
Definition
Tourism industry consists of a wide number of businesses such as food and beverages,
hotels, resorts and many more. The tourism industry has been contributing to the development of
any country as there are different places which are having the power to be attractive as well as
unique. According to the situation of the market, increment in the prices of products as well as
services have a great impact on the purchasing power of the market share. After the pandemic
situation of COVID-19, economic lockdowns along with new preventive measures have greatly
impacted all the industries (Andrade and Costa, 2020). Therefore, it has been seen that there are
different preventive measures that are also used by the tourism industry for the purpose of
dealing with the adverse issues. This will help to overcome the challenges and issues within the
tourism industry in an effective and efficient manner. This can also be observed that inflation is
considered as a key reason that has more power to influence tourism sector within the different
countries. The situation of inflation takes place when the supply of the money is more in
comparison to the availability of the products and services within the marketplace. This has been
taken into account the major issue within the economy as it can easily be understood that it is the
situation under which prices tend to increase. This can also be believed that because of the
situation of inflation, there will be a rise in the amount of the money in relation to the suppky of
te available goods and services. In additio to it, inflation is said to be the measure of rate of the
increasing prices of the products as well as services within an economy. Hence, the situation of
inflation is determined to happen within an economy when prices of the products and services
rise because of the increase in cost of production such as wages and raw materials (Bazargani
and Kiliç, 2021). A flow in the demand of the goods and services can result in the situation of
inflation because market share is willing to pay more for goods and services. This majorly takes
place when products prices increase throughout the economy that will result in the minimisation
of the buying power of the money. There are a large number of reasons behind demand-pull
inflation as well as cost-pull inflation. There are several methods or ways that are used for

measuring inflation and some of these include Consumer Price Index (CPI), Personal
Consumption Expenditures Price Index (PCE), Producer Price Index (PPI) and many more.
Figure 1:Why Is Inflation Bad? 3 Effects Of Inflation
Positive and Negative Impacts of Inflation
Impact of Inflation Explanation
Positive impact of
Inflation
The producer of the products and services charge more money
which helps them in selling their goods at high price which brings a
positive impact on inflation (Clark and Nyaupane, 2020). In
addition to it, there will be a large extent of profitability because of
the capacity to sell for additional money. Better return from
investment as a result of rewards provided to the owners of
business as well as invetors for their investment in successful
companies. At time when prices of the products and services of
tourism industry tend to rise then, there will be inflation and based
on differebt economists, inflation results from expansion of money
supply in relation to supply of available products.
Negative impact of
Inflation
The major drawback or adverse influence of inflation is less buying
power because a person cannot buy its products and services as it
used to purchase before the situation of inflation (Hadi, Irani and
Gökmenoğlu, 2022). Such situation influence the lowest income

people or families because it becomes typical to afford basic
material from market. Because of the situation of inflation, the
income as well as savings are considered as less valuable because
people are unable to save as much as they used to. This can be seen
within the economy as it is one of the critical issue as when the
prices of the products and services rise, the workers want to possess
good and effective number of salaries because of which it can
result into rise in price in future period and the cycle continues
(Khan, Khan and Shafiq, 2021). There is another adverse impact of
inflation which is concerned with loss of products and services as
almost companies got influenced within the inflationary times. The
major reason is that the people are willig to prefer to invest in
products or services that are in requirement. Because of the
situation of inflation, the money loses its value at time when the
price of the product rises.
Solutions that the tourism industry can used for reducing negative influence of inflation which
aims to identify solutions for tourism organisaion for assisting ease inflation pressure.
Influence of inflation assists in minimising the buying power of the people or families
because of the rise in pices. Influence of inflation can be observe throughout varied sectors of the
conomy and are favourable to some while negative to others. Therefore, this can result in
discouragement of the investment as well as savings for the future period of time as the price is
uncertain. There are different preventive measures used by tourism industry for getting rid of
negative influence of inflation which are mentioned as under:
 When there is money surplus as compared to amount of available products as well as
services, the situation of the inflation occurs. Since this can be concluded as a situation
within which prices tend to increase (Long and et.al., 2022). This refers to the primary
economic problem. There is another theory when there is increase in the prices. In this
situation, there will be more money which is available in relation to the availability of the
products within the marketplace. This is recommended to analyse the profit margin as it

is necessary to revaluate the cost first and after that considering the magin challenges.
The challenges that are now encountering within the marketplace must be consider by the
organisaion and therefore it is recommended to start research on the approaches and ways
for increasing those margins from there through maintaining the quality of the products
as well as services.
 Additionally, the key concentration is on enhancing the output level because this can be
viewed that when workers perform quickly and efficiently then profitability will likely be
more (Nguyen, Binh and Su, 2020). This is also recommended to make use of those tools
and programmes which will track as well as improve productivity level.
 Accurate and appropriate financial plan should also be prepared for the purpose of
performing better duting inflation. Proper and effective training must also be provided to
the employees who are less skilled so that they would be able to deal with the different
circumstances.
 Price Model can get replaced in some of the cases when the market share notices the less
priced products within the marketplace. In any kind of environment, investments must be
taken into account. It is also recommended to make a difference between nonstrategic and
strategic cost reduction, fiduciary requirements, preservation of customer experiences and
unique employee. For example, instead of combining them it is better to use consistent
and transparent financials for prioritising investments with greater returns on the
spendings.
 The major concentration should be provided on the stocking up on supplies which will
provide assistance to the companies in addressing the issues concerned with supply chain
as well as inflation. There is another determinant which should be taken into account in
relation to cut the expenses whenever as well as wherever possible. For instance, this is
also necessary to confirm whether business is paying for products which are not used or
cancelled them (Schiopu and et.al., 2021). Moreover, it is also suggested to think of using
various materials and one can place inexpensive options to products and materials.
 The organisaions must be prepared for the new market share and consequently it can be
observed that as a point of light for possibly the reduced costs and rates. The segments of
the customers as well as niche markets which were previously unachievable can now get
reached. Inverse of the inflation is deflation that minimises the cost of many products

such as food. First of all, the paper of deflation is useful as it enhances the value of the
money. The share prices of such organisations referred to the element of the greater stock
market as well as economy that are influenced by the practices of deflation (White,
2019). The situation of deflation can be avoided through having some sort of inflation.
A Gantt Chart that shows the research tasks and timings of the tasks

References
Books and Journals
Andrade, M. J. and Costa, J. P., 2020. Touristification of European port-cities: Impacts on local
populations and cultural heritage. In European port cities in transition (pp. 187-204).
Springer, Cham.
Bazargani, R. H. Z. and Kiliç, H., 2021. Tourism competitiveness and tourism sector
performance: Empirical insights from new data. Journal of Hospitality and Tourism
Management, 46, pp.73-82.
Clark, C. and Nyaupane, G. P., 2020. Overtourism: an analysis of its coverage in the media by
using framing theory. Tourism Review International, 24(2-3), pp.75-90.
Hadi, D. M., Irani, F. and Gökmenoğlu, K. K., 2022. External determinants of the stock price
performance of tourism, travel, and leisure firms: evidence from the United
States. International Journal of Hospitality & Tourism Administration, 23(4). pp.679-
695.
Khan, A., Khan, N. and Shafiq, M., 2021. The Economic Impact of COVID-19 from a Global
Perspective. Contemporary Economics, 15(1). pp.64-76.
Long and et.al., 2022. Can Central Bank mitigate the effects of the COVID-19 pandemic on the
macroeconomy?. Emerging Markets Finance and Trade, 58(9). pp.2652-2669.
Nguyen, C. P., Binh, P. T. and Su, T. D., 2020. Capital investment in tourism: a global
investigation. Tourism Planning & Development, pp.1-27.
Schiopu and et.al., 2021. Virus tinged? Exploring the facets of virtual reality use in tourism as a
result of the COVID-19 pandemic. Telematics and Informatics, 60. p.101575.
White, R. R., 2019. The influence of environmental and economic factors on the urban crisis.
In African Cities in Crisis (pp. xiv-19). Routledge.