Research Report: Inflation's Impact on UK Tourism - Globus Travel

This report investigates the effects of inflation on the UK tourism industry, using Globus Travel as a case study. It explores the concept of inflation in the context of tourism, examining both positive and negative impacts on Globus Travel's operations. The study identifies that while inflation can increase revenue for hotels, it also reduces tourists' purchasing power and overall industry growth. The report also suggests solutions, such as controlling money flow and balancing demand and supply, to mitigate the adverse effects of inflation on tourism companies. The research employs a positivism philosophy and a deductive approach, utilizing both primary and secondary data sources to arrive at its conclusions. Desklib provides this and other solved assignments for students.

Research Project
(To determine how inflation affects tourism industry of
UK along with appropriate solutions to minimize
negative impacts of inflation)

Table of Contents
INTRODUCTION.......................................................................................................................................3
Research Aim:.........................................................................................................................................3
Research Objectives................................................................................................................................3
Research Questions.................................................................................................................................3
Literature Review........................................................................................................................................4
Concept of inflation in reference of tourism industry..............................................................................4
Negative as well as positive impacts of inflation on functions of Globus travel organization.................4
Solutions in order to minimize negative impacts of inflation on Globus travel organization...................5
Research Methodology................................................................................................................................5
Conclusion...................................................................................................................................................6
References...................................................................................................................................................7

INTRODUCTION
Inflation is all about increase in the rate of products and service which makes it complex
for the buyers to purchase the goods. Due to inflation purchasing power of the customers reduce
down and they cannot purchase huge amount of products from available funds to them. In other
words, inflations put an adverse impact in purchasing capacity of customers. Hence, they will be
able to buy fewer items within available amount of funds. This increases cost of each and every
item and eventually minimizes the growth of economy. Further, this also put a direct impact on
the lifestyle of individuals hence, it becomes complex for the people to fulfill their expenses
(Lee, Chen and Peng, 2021). In context of tourism industry, high rate of inflation increased the
ticket price, rate of hotel rooms and other services so it becomes expensive for customers. The
present study is based on Globus travel organization which offers tour packages to the most
fascinating places across the world with curiosity and more. The main aim of the respective
organization is to offer the best possible experiences to the visitors. The report will cover
negative and positive impacts of inflation on the operations and functions of the respective
entity.
Research Aim:
“To determine how inflation affects tourism industry of UK along with appropriate solutions to
minimize negative impacts of inflation”. A study on Globus travel organization.
Research Objectives
 To understand the concept of inflation in reference of tourism industry.
 To analyze negative as well as positive impacts of inflation on functions of Globus travel
organization.
 To develop suitable solutions in order to minimize negative impacts of inflation on
Globus travel organization.
Research Questions
 What is the concept of inflation in reference of tourism industry?

 What are the negative as well as positive impacts of inflation on functions of Globus
travel organization?
 What are the suitable solutions in order to minimize negative impacts of inflation on
Globus travel organization?
Literature Review
Concept of inflation in reference of tourism industry
As per the point of view of Venugopalan and Kumar, (2017), inflation is basic term that
shows the rate of increase in the overall price during a particular period of time. It is all about
enhancement in the price of products and services which put a direct impact on the buying
capacity of individuals profoundly. Further, it refers to the percentage changes in the value of
goods on regular basis. It creates a imbalance between demand and supply significantly. The
value of currency also reduces when prices of products and services is increased which further
create complexities for buyers in terms of buying necessary products. In this situation, less
amount of goods can be purchased. Additionally, inflation has worse impact on the purchasing
capacity of buyers. With increasing in price, it becomes difficult for consumers to even buy basic
commodities (Islam, Zhang and Hasan, 2020). As a result, they start to demand for high income
to fulfill the basic needs of life. A particular range of inflation is also appropriate for the
economy as it stimulates people to fulfill their basic needs within particular period of time.
Negative as well as positive impacts of inflation on functions of Globus travel organization
As per the point of view of Rinaldi and Salerno, (2020), in terms of positive impacts,
inflation is helpful for tourism industry to earn higher amount of revenue as higher class people
are not affected with increase and decrease in rates as they are likely to avail the services
irrespective of price. Also, high status people spend more and more amount of travelling which
helps in enlargement and development of the economy. Further, this will help in generating more
and more income for economy of UK and the available funds can be used further for the
upliftment of nation to enhance the standard of people and eradicating the poverty. Also, money
is used to develop necessary infrastructure and ensure the development of society. Inflation

increased rated of services and provide opportunities to the hotels to earn higher amount of
revenue for their future growth.
As a result of inflation, purchasing power of the individuals reduced down. As a result,
they are less likely to avail the services that will create direct influence on revenue and
profitability of the entity. In context of tourism industry, it reduces down the buying capacity of
tourists that adversely affect the overall earnings of hospitality and hotel industry (Wang, Feng
and Huang, 2021). Moreover, inflation has reduced down the growth rate of tourism industry of
UK for past certain years. Middle class people are not in the condition to afford travelling during
high inflation due to their lower buying capacity. Inflation affects all the sectors of economy that
minimizes the overall economic growth profoundly.
Solutions in order to minimize negative impacts of inflation on Globus travel organization
As per the point of view of Vajirakachorn and Chongwatpol, (2017), it is analyzed that
inflation puts a major positive as well as negative impacts of tour and travel industry by directly
affecting the buying capacity of people so that they cannot afford the tourism services. On other
side, it also helps in generating more and more income for hospitality companies to ensure future
growth. As a result of negative impacts sales and profit margin of tourism companies get affect
profoundly. In this situation, it becomes imperative for hotels to develop appropriate solutions in
order to deal with the situation in an appropriate manner. Here, reduction in consumption is an
important way that is useful for the companies to deal with adverse impacts of inflation in the
best possible manner (Kim and et. al., 2021). To control the adverse impacts, there is
requirement to keep control over the flow of money in the economy so that demand and supply
of monetary resources can be controlled. Therefore, these steps will prove helpful for the
respective entity to control the inflation appropriately.
Research Methodology
Research methodology is an imperative part of the project as it helps in getting
appropriate outcomes in future. In present context, the selected philosophy is positivism as it
helps in making objective analysis of the available information. Further, deductive approach has
been used to analyze the available theory in an appropriate manner. In context of research
methods, there is selection of suitable methods to analyze the information properly. Moreover,

adequate amount of data has been gathered from primary as well as secondary sources to gain
authentic results in an efficient manner.
Conclusion
After analyzing the above-mentioned information, it is monitored that Inflation is all
about increase in the rate of products and service which makes it complex for the buyers to
purchase the goods. Due to inflation purchasing power of the customers reduce down and they
cannot purchase huge amount of products from available funds to them. In other words,
inflations put an adverse impact in purchasing capacity of customers. Further, this also put a
direct impact on the lifestyle of individuals hence, it becomes complex for the people to fulfill
their expenses. In context of tourism industry, high rate of inflation increased the ticket price,
rate of hotel rooms and other services so it becomes expensive for customers. It is monitored that
inflation significant affects the profit and revenue of tourism companies by minimizing the
overall number of visitors profoundly. In terms of positive impact, inflation is useful in
increasing revenue of hotels as they are in condition of charging high amount from customers
that further lead towards increment in overall sales & profitability. It is found that, inflation is
likely to affect number of tourists visiting to a country during particular period of time. Here,
inflation minimizes the purchasing capacity of people as they cannot avail the tourism and
hospitality services. During inflation, purchasing power of the individuals reduced down. As a
result, they are less likely to avail the services that will create direct influence on revenue and
profitability of the entity. In context of tourism industry, it reduces down the buying capacity of
tourists that adversely affect the overall earnings of hospitality and hotel industry. Moreover,
inflation has reduced down the growth rate of tourism industry of UK for past certain years. In
order to deal with adverse impact of inflation, there is requirement to maintain proper flow of
money across the economy. Moreover, there is requirement to maintain a proper balance in
demand and supply of money within the economy to get better and appropriate results in future.

References
Books and journals
Islam, M.F., Zhang, J. and Hasan, N., 2020. Assessing the adoption of sustainability practices in
tourism industry: Insights from a developing country. The Bottom Line.
Kim and et. al., 2021. Spatial spillovers of agglomeration economies and productivity in the
tourism industry: The case of the UK. Tourism Management, 82, p.104201.
Lee, C.C., Chen, M.P. and Peng, Y.T., 2021. Tourism development and happiness: International
evidence. Tourism Economics, 27(5), pp.1101-1136.
Rinaldi, A. and Salerno, I., 2020. The tourism gender gap and its potential impact on the
development of the emerging countries. Quality & Quantity, 54(5), pp.1465-1477.
Vajirakachorn, T. and Chongwatpol, J., 2017. Application of business intelligence in the tourism
industry: A case study of a local food festival in Thailand. Tourism Management
Perspectives, 23, pp.75-86.
Venugopalan, T. and Kumar, D., 2017. Sustainable development through sustainable tourism in
India-A case study of Kerala tourism. Asian Journal of Research in Business Economics
and Management, 7(12), pp.10-27.
Wang, Y.C., Feng, Z.Y. and Huang, H.W., 2021. Corporate carbon dioxide emissions and the
cost of debt financing: Evidence from the global tourism industry. International Journal
of Tourism Research, 23(1), pp.56-69.