TUI and Inflation: Strategies for Business Resilience in Tourism

This report examines the impact of inflation on the tourism industry, focusing on how rising prices affect businesses and consumers. It defines inflation, explores its causes, and measures its effects using the Consumer Price Index. The report identifies that high inflation rates negatively affect tourism demand and the tourism sector. It analyzes the impacts of inflation on company operations, including reduced purchasing power, decreased sales, and altered customer behavior. The report uses TUI as a case study to understand how a tourism company can cope with inflation by implementing strategies such as getting spending visibility, differentiating between strategic and non-strategic spending, and identifying cost-saving measures. The report concludes that inflation reduces customer purchasing power and increases travel package prices, leading customers to seek lower prices elsewhere. The report also references several academic sources.

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Introduction
Inflation is a term which means a general increase in the prices
of goods and services in an economy. Due to it many
companies and industries faces many difficulty to operate their
business properly. High inflation rate in the economy affecting
tourism demand and the tourism sector within developing
countries. Thus, current poster is conducted to identify the
impact that company has been faced in the past due to
inflation as well as how it would overcome this challenge.
Key operations and markets
• The business operations of TUI are grouped into three regions
which name as central region, northern region and western region.
The major source markets of the company are UK, Netherland,
Belgium, UK, Nordics ( Norway, Denmark, Finland, Sweden),
Switzerland, France and Austria.
• The company provides service like package holodays, charter and
scheduled passenger, hotels and resorts and cruise lines
Conclusion
• From the above information, it has been concluded that the inflation is one
of the factor that decreases the purchasing power of customers due to
increase in the prices of goods and services.
• Due to this, tourism industry face many difficulties to make their business
operation. Higher inflationary rate in the economy increases the prices of
travelling packages due to which customers avoids them and searching
other company that provide similar service in lower rate.
• It makes important for the company to find effective strategies that helps in
reducing the negative impact of inflation on their business. The strategies
that they may used are getting spending visibility, differentiating between
strategic and non-strategic spending, unpacking the drivers of spending,
reducing on consumption as well as eliminating work automation.
Inflation management strategies
deployed
• Inflation has many adverse impact on the tourism industry and businesses. To
dealing with these negative impacts, it is important for the company to find
out the effective strategies for their business.
• The first strategy that help tourism company to cope with the negative impact
of inflation is getting spending visibility. The high resolution spending
visibility is the foundation of any expense management capability. It allows
company's managers to properly understand where money is invest and who
invests it. At the time of inflation, it is difficult to establish end-to-end,
repeatable, actionable visibility related to spending through business process,
cost category, function and business unit.
• The other important strategy that help tourism company to reduce the
negative impact of inflation is differentiate between strategic and non-
strategic spending. The managers of the company should clearly distinguish
between strategic and non-strategic cost cutting, the protecting of signature
customer , fiduciary requirements as well as employee experiences. They
should identify where the investments is pulled back as well as cost saving
realised, where they can more selectively trim costs for improving the return
on operating expenses along with where they can enhance growth by doing
large investment in the strategic capabilities required for achieving differential
results.
Company background and overview
• The selected organisation for this poster is TUI, it is largest tourism
group of UK. It is incorporated in 1923 and its headquarters are
located in Hannover and Berlin Germany.
• The company employed more than 9000 employees including
travel agents to cabin crew, engineers to back office staff. It
provide tourism facility in more than 85 destinations within 38
nations across the world.
.
References
•Juraev, E.S., 2020. INFLATION RISK. Мировая наука, (1), pp.29-33.
•Haggard, S. and Kaufman, R.R., 2018. CHAPTER SIX. The Political Economy of Inflation and Stabilization in Middle-Income Countries. In The politics of economic
adjustment (pp. 270-316). Princeton University Press.
•Herman, H., 2022. Impact Of Percapita Expenditure And Inflation On Poverty In Pekanbaru City:(Before And After The Covid-19 Pandemic). International Journal of
Islamic Business and Management Review, 2(1), pp.69-75.
•JAKŠIĆ, S., IMPACT OF INFLATION ON OUTPUT IN CESEE COUNTRIES: EVIDENCE FROM A GLOBAL MACROECONOMETRIC
MODEL. Romania, 400(500), p.600.
Inflationary periods and main causes Impacts of inflations on company’s operations and
performance
• High inflation rate in the economy is very dangerous not only for consumers but also for the
companies and industries. It is because purchasing power of the company is decline in inflation
and they make less purchases, due to which sales and profitability of the company are also get
affected.
• At this time, customers avoid to avail tourism services due to which tourism industry is also
get affected. When the inflation rate rises in the economy the prices of holiday packages and
other tourism services are also increased. Increases in its prices affects the affordability of
customers due to which they just avoid for availing these services.
• The nature of the customer is price sensitive which means that they find another company that
offer particular products and services at lower prices. Shift of customers towards other brand
create difficulty for the company to operate their business and protect their business growth.
• Inflation means rise in the cost of goods and services of overtime.
• There are many factors such as increases in the cost of production through
which inflation rate in the economy changes. It can be measured on the
monthly basis by using the Consumer Price Index.
• The causes of increase in inflation rate in 2022 are more complicated and
have been caused due to the government's response to the pandemic along
with the sudden rise in demand because coronavirus lockdown restrictions
faded and labour shortage arise in all over the country.