Foundation Year Research: Hays Travel Inflation and Strategies

This project analyzes the impact of inflation on Hays Travel, a prominent company in the tourism industry. The project begins with an introduction to the challenges faced by the tourism sector, especially during inflationary periods, and outlines the purpose of the poster, which is to analyze the impact of inflation on Hays Travel and propose strategies to overcome these challenges. The project provides a company background and overview of Hays Travel, including its services and global presence. It then defines inflation, its causes (demand-pull, cost-push, increased money supply, and devaluation), and the strategies for managing inflation. The project also explores the impacts of inflation on Hays Travel's operations and performance, such as price sensitivity, cost-cutting measures, and employee dissatisfaction. The project concludes by summarizing key operations and markets of Hays Travel and offering recommendations for inflation management, drawing on monetary policy, fiscal measures, and price controls. The project uses relevant models and theories to support its arguments and includes references to academic and industry sources.

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Introduction
Tourism industry is one of the fastest growing industry in the world.
There are various opportunities as well as challenges they have to face
for their growth. One of the biggest challenge for tourism industry is
COVID 19 Pandemic. The purpose of this poster is to analyse the
impact of inflation upon a tourism organisation and the ways to
overcome this challenge
Key operations and markets
• Key operations of Hays Travel is to provide holiday packages to
their customers with quality destinations as per the desire of
customers and within their budget.
• Different customers in tourism industry are having different
budgets, hence, Hays Travel help the customers to identify which
place and what all services they can use to satisfy their needs and
wants appropriately.
• Most popular destinations offered by this organisation to their
customers are Spain, Balearics, Canaries, Portugal, Greece, Malta,
USA, Italy and many others.
• They allow travelling facilities for all kind of travellers whether it is
solo travelling or travelling with family.
Conclusion
It has been concluded that inflation aims to increase the prices of goods and
services while diminishing the purchasing power of consumers. An
exposure of coronavirus delivers a big impact on the activities and
operations of tourism sector such as increasing rates of flight tickets,
lowering down the workforce and many more. Covid-19 also leads to
inflation due to which many of the customers are avoiding taking services
or goods for consumption purpose. There are several causes due to which
inflation has been increasing such as demand-pull inflation, cost-push
inflation, rising wages, policies and regulations and many more. However,
inflation can be managed with right strategies and measures which also has
been discussed in this report. These are reducing unnecessary expenditures,
increasing savings, price control and much more.
Inflation management
strategies deployed
Inflation is caused due to the non-accomplishment of mass
supply to equal the rise in mass demand. It can be controlled
by rising the supplies of services and physical goods along
with reducing the earning with an intent to control to
collective demand. It is analysed that monetary policy is one
of the measures or strategies to control inflation within the
country. The central bank of the nation adopts a series of
methods to control the quality and quantity of credit. For
such cause, it increases the rates of bank, raises the reserve
ratio, sells securities in the open market and adopts a range of
selective credit control measures like regulation of consumer
credit, increasing margin requirements. Monetary policy is
useful due to the demand pull factors that controls inflation.
Also, inflation can be managed by reducing unnecessary
expenditure. Inflation can be managed if government take
initiate to diminish unnecessary expenditure on non-
development activities. It will focus on private expenditure
which is reliant on government demand for services and
goods. This strategy should be supplemented by taxation.
Also, inflation can be managed by increasing savings of the
people. It will help in decrease disposable income with the
people, thus, individual consumption expenditure. But,
because of the increasing cost of living, humans are not tend
to reduce their personal expenditure or save money on
voluntarily basis. Deferred payments has been introduced
where people saves money and return back it after some
years. For such reasons, the government should display
public loans carrying high interest rates, lottery for long
periods, start saving schemes with prize money and many
more. There is also a need to introduce provident fund-cum-
pension scheme, compulsory provident fund and so on. All
such strategies rise savings and are more promising to be
effective in managing inflation. Surplus budget is another
measure to manage inflation. For that reason, the government
should not focus on deficit financing and more focusing on
surplus budgets. It signifies collecting more in earning and
less in expenditure. Price control is a measure of direct
control to manage inflation. It means that fixing an upper
limit for the value of necessary consumer products. It helps
in fixing the prices by law along with anyone charging more
than such prices is punishable by legislative body.
Company background and overview
• Hays Travel is one of the most popular company in tourism
industry which was founded in the year 1980 by John Hays
• It is headquartered in Sunderland, England, UK. They provide
various tourism services like package holidays, cruise lines, hotels
and resorts.
• There are more than 450 branches of this organisation all across the
world. Since May 2018, Hays Travel reached sales of over £1
billion.
References
Su, C.W. and et.al., 2020. A review of resource curse burden on inflation in Venezuela. Energy, 204, p.117925.
Agénor, P.R. and da Silva, L.A.P., 2019. Integrated inflation targeting-Another perspective from the developing world.
Meyler, A. and Reiche, L., 2021. Making sense of consumers’ inflation perceptions and expectations–the role of (un) certainty. Economic Bulletin Articles, 2.
Online:
Kevin L. and Matthews II, 2022. What to know about the 6 main causes of inflation [Online] available through: <
https://www.businessinsider.com/personal-finance/causes-of-inflation?IR=T/>
United Kingdom Inflation Rate, 2022 [Online] available through: <https://tradingeconomics.com/united-kingdom/inflation-cpi/>
Inflation period is the time duration when the prices of goods and services rises and the
purchasing power and will of customers declines. In inflation period customers need to
spend more to buy products. Hence, they avoid to spend on normal products which is
not too much necessary for them to live their life. Inflation rate is measured on monthly
basis and overall inflation rate is measured on yearly basis by identifying the average
inflation rate for all 12 months. Customers are willing to wish that the inflation rate
should be low as much as possible because this will help them to buy more products at
affordable prices. The standard of living also increases when inflation rate is low. There
are few main causes of inflation within a nation and these causes are mentioned below-
• Demand-pull inflation- This happen when the demand for specific goods and services
is more than the economy's ability to meet those demand. When government analyze
that the demand of few products are increasing in rapid manner that the companies
are unable to manufacture it at that level then they increases the price of that good
and services so that few of the customers step backward to demand that product. In
context of tourism industry, when most of the customers demanded to spend their
holidays within a specific and one location only then companies increases the holiday
packages and suggest them to switch their choices.
• Cost push inflation- This is the inflation cause when the prices of goods and services
are increased when the cost of wages and raw material goes up. Sometimes, workers
demanded for higher their wages and due to this change the company need to
increase their prices of final gods and services to cover the cost plus to add profit
margin. Hence, same with tourism industry, when they increases the salaries of their
employees and the charges of accommodation services enhanced then they have to
increase the prices of their holiday packages to cover the cost as well as to earn good
profit.
• Increased money supply- It means the total amount of inflowing money or circulation
of money within an economy. Here, inflation takes place when the money supply is
greater than the rate of production. This is the under control of central bank of any
nation to control the circulation of money within their country. Keeping a balance in
money circulation and rate of production is essential for the growth of a country.
• Devaluation- Devaluation is downward adjustment in a country's exchange rate,
resulting in lower values for a country's currency.
Inflationary periods and main causes Impacts of inflations on company’s
operations and performance
Due to inflation, customers avoid to use travel and tourism services because when
inflation takes place then the holiday packages and other services prices also
increases. Hence, customers are price sensitive, therefore they tries to find those
travelling and tourism companies who provide similar services at lower prices. In
context of inflation, their customers may shift to other travelling agencies and this
impacts negative upon their growth. On the other hand, during inflation Hays Travel
tries to cut down their cost as much as possible. They even reduce the salaries of
their employees to lower overall prices of their services to customers. This may
cause employee dissatisfaction and lower their performance. This make harder for
company to retain their employees for longer period of time. Every company plan
for better strategies during high inflation rate, same with Hays Travels, they plan and
try to overcome the issues. Hence, a lot of time and money is wasted on new plans
and execution of plans. Currently, the annual inflation rate of UK is 9.9% which is
considered as high inflation rate for any nation (United Kingdom Inflation Rate,
2022). This is not good for any industry in UK including travel and tourism industry.