Madrid Tourism Industry: Challenges, Perspectives, and Solutions

This report provides a comprehensive analysis of the tourism industry in the Madrid region, focusing on the economic dimensions, stakeholder relationships, tourist motivations, and the impact of globalization. The report begins with an introduction to the tourism sector in Spain, highlighting its significant contribution to the GDP, and then delves into the complexities faced by the Madrid tourism industry. It examines the importance of economic perspectives, including demand and supply elements, the role of tourism in GDP growth, and the effects on income distribution and employment. The report then explores the significance of stakeholders, including owners, governments, managers, and employees, and provides a stakeholder analysis to reduce complexities. Furthermore, the report analyzes tourist motivations, emphasizing nature-based tourism and its potential to attract visitors. The report also discusses the impact of globalization and the need for innovation in products and services. The report concludes by summarizing the key findings and offering insights into the challenges and opportunities for the Madrid tourism industry.

Coursework the Madrid
Region
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Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Complexities of tourism industry in relation to the importance of economic perspectives.........3
Complexities of tourism industry in relation to the importance of stakeholders.........................4
Complexities of tourism industry in relation to importance of tourists’ motivation...................6
Complexities of tourism industry in relation to importance of Globalisation.............................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11
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INTRODUCTION
Tourism is one of the largest industry that is concerned with people travelling for either
pleasure or for travelling in their destination for at least one night. In the year 2019, the
contribution of tourism sector towards the GDP of Spain is 221.4 billion US dollar (Díez‐
Pisonero, 2019). This is indicating the average annual rate of contribution is 5.47%. Madrid is
capital and most popular city of Spain which attract large number of tourist and travellers each
year. However, there are also various complexities that tourism industry of Madrid region is
facing in the present environment. Understanding the difficulty that tourism industry is facing in
term of different perspective is important as it helps the sector to solve the same.
Thus, the present report will cover the complexities of tourism industry in relation to the
importance of following perspectives such as economic dimension, stakeholders, tourist
motivations as well as the globalization perspective.
MAIN BODY
Complexities of tourism industry in relation to the importance of economic perspectives
Before discussing complexities of tourism sector as well as importance of economic
perspectives, it is important to understand about changes that have been made in this sector and
reasons as why Madrid is suffering problems in attracting tourists. In regard to Madrid, it is
found that it has been hit by the pandemic and it affected its sales. It knows that for making an
effective position in the market as well as achieving tourists, there is need to make products and
services innovative and it is the reason as it has developed new concept at the time of FITUR and
new concept of international tourism region will be known as greater Madrid.
Importance in regard to economic perspective: In regard to economic perspective, it
can be said that tourism is one of the main big sectors that contribute high in improving in
improving economic goals. Tourism is wide sector that requires number of activities and it
generates income, employment as well as foreign exchange earnings. Tourism sector entails a
collection of goods and services that are being provided to visitors.
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Figure 1: Contribution of tourism in global economy
For attracting tourism and satisfying them, tourism sector needs to make partnership with travel
sector, local businesses like restaurants, hotels, local transportation, food and beverage and
others (Altinay and Taheri, 2018). Tourists can be made satisfied only when there is availability
of good food, accommodation, tourists place and transportation facilities. So, in this regard, it
can be said that tourism sector is a collection of number of goods and services and it can increase
employment opportunities.
Some complexities and elements associated with economy of tourism include:
Elements of demand and supply: There are three main factors that can affect demand of
tourism such as: overall tourism growth, growth in specialty travel and increasing awareness of
environment. Each of this element also influenced by other elements such as: quality of travel
services, education and others. Rising income, employment, growing population and shorter
work weeks are some factors that can rise in demand of tourism. So, on the basis of this, it can be
said that Madrid’s region tourism needs to focus on all these elements and need to provide
employment opportunities by rising demand and attracting tourists.
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Tourism and GDP: It is known that tourism plays a vital role in increasing GDP. This
sector is directly as well as indirectly is linked with IT. This sector highly contributes in
increasing GDP and it is the main factor of employment in another sector as well.
Income distribution effect and employment: It is one of the other main socioeconomic
arguments in the favor of development of tourism. At spatial level, tourists often prefer to travel
in regions with little industrial development (tom Dieck, Jung and Rauschnabel, 2018). It can be
great opportunity for Madrid as it can attract tourists and by providing qualitative services and
products to them, it can increase their satisfaction. For this, it would require making an alignment
with local stores, restaurants and others. It is estimated that worldwide tourism directly as well as
indirectly support around 65 million other jobs that include: taxi drivers, hotel managers, shop
attendants, tour operators and others. Handicraft, agriculture and service areas are other sectors
in which employment is generated because of tourism.
Figure 2: Growth in total contribution of travel and tourism to GDP in UK
So, on the basis of this, it can be said that tourism plays a vital role in improving
economic condition but some challenges that Madrid’s region of tourism is facing in this
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perspective include: increasing rise in fuel, travel expenses, lack of availability of suppliers, and
high investment in health and safety tools for abiding all rules of Covid-19 (Adedoyin and et.al.,
2021). But by innovating its products and services, it can grab attention of tourists that can
increase its sales and can make it able to take competitive advantages.
Complexities of tourism industry in relation to the importance of stakeholders
Management of Tourism destination is important for maintaining position in competitive
market. Competition in tourism industry is more increasing and it is important in efforts to
increase the performance of the tourist destination. Stakeholder is very important as it develops
the plans and strategies in a manner to grow organization and earn profit. Thus, will do
Stakeholder analysis to reduce the complexities in tourism industry.
 Keep Satisfied  Manage Closely
 Monitor (Minimum effort)  Keep Informed
Thus, analysing from the above table it can be analysed the power and the interest of
peoples.
High power, less interested people (Keep Satisfied)- The peoples like the owners and the
government have the high powers, but they were less interested in the activities of business. In
this case the organization should encourage the people in their work by motivating the people to
keep them satisfied.
High power, highly interested people (Manage Closely)- These are those people which are active
in the day to day activities of the organization. They have the power of roles and responsibilities.
The organization should engage the peoples like managers by applying the greatest efforts on
them to satisfy them.
Low power, less interested people (Monitor)- This people were less interested in the
organizational goals and make fewer efforts on achieving the goal as they do not have powers.
Thus, monitoring these people is must but it should not be excessive which bore them.
Low power, highly interested people (Keep informed)- These people are the employees of the
business which have much interest in business but does not have powers. People in this category
are helpful as they provide much information of the project. Thus, communicate and inform
these people so no issues arise (Dimitrovski and et.al., 2021).
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Therefore, from the above it can be said that to reduce the complexities of tourism in
relation to stakeholder organization should closely manage and engage the managers and
encourage the owners, governments in organization work which keeps them satisfied by
achieving the goals. Maintaining a communication with employees and informing them reduces
the threats and monitoring the peoples like family member, visitors, people who were performing
work for few days have less interest in the organizations, but it should not be excessively
monitored that bored them.
Analysis of Stakeholder also includes the identification of the stakeholder in the
organization. All the individuals which were affected by the company's work and which have the
interest in achieving the organizational goals and the people having the power in the business, all
these can be identified as the Stakeholders of the organization (Romero, Ruiz and Fernandez‐
Feijoo, 2019). Thus, it can be said that stakeholders are the boss, shareholders, employees,
managers, governments, suppliers, creditors, co workers, customers, public, family, advisors,
contributors, analyst, trade associations, partners and the press. There should be a correct
identification of individual stakeholder in the organization. After identification organization
should understand your shareholder and its opinion. Understanding of stakeholder includes the
interest of the individual in their work, identifying whether they have positive interest or not and
identifying the tools which motivates them. Identifying the best communication way and
opinions of individuals for the work and identifying the key motivation points which encourage
them in work.
By understanding the stakeholder in the business helps the business in reducing the
complication in tourism industry. In tourism industry the importance of stakeholder is very
important as it impacts on the success or failure in the business. At current time there is a huge
competition in tourism industry the interest of the managers in the achieving the goals in
competitive market plays major role. The important point is managing the interest of the
stakeholder which profits the organization in both short and long term. In Madrid, tourism is
contributes more to the economic GDP that is by 11.8 percent contribution. The country has
recorded 83.7 million tourists in 2019 in Madrid, the destinations were especially popular in
summer holidays and comes a number of tourists from different places like UK, France,
Germany, Italy, US, Ireland and many other countries (Nguyen and Mohamed, 2018). Thus, by
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studying the roles of stakeholder and motivating them increase the interest of stakeholder and
tourist in the industry.
Complexities of tourism industry in relation to importance of tourists’ motivation
Tourists’ motivation also plays a vital role as it includes factors that can help out tourism
sector in attracting tourism to the great extent. Some factors that can increase tourists’ motivation
and can grab their attention towards Madrid’s tourism include: tourism amenities, culture,
religion and destination.
Nature based tourism: It is a form of leisure travel to enjoy natural attractions via
different outdoor activities. Nature based tourism provides number of opportunities to tourists to
enjoy and increase experience. Wildlife, natural history and rope climbing and other adventures
are associated with nature play a vital role in attracting tourists. In addition, it can be said that
nature-based tourism and all these things can influence environmental behaviour of people. This
nature-based tourism not only increase tourists’ experience but also increase awareness of natural
as well as cultural values through learning. There are number of other factors included in nature-
based tourism that can also make beneficial to Madrid such as: tourists’ motivation, cultural
beliefs, expectations, geographical setting and other education elements. It is found from survey
that tourists love to explore natural hilly areas, love to do adventures like rock climbing,
mountain climbing, ice climbing, trekking, skydiving and others. All these can be done only in
hilly regions. So, on the basis of this, it can be said that Madrid can take advantage of this as it is
a city of elegant boulevards and expansive parks. It can become the main attraction of tourists
and can make Madrid able in regaining its image and increasing sales as well.
Tourism is a chain in which there is requirement of tourism input and it can give experiential as
well as pro environmental outcomes such as:
Tourism inputs: perceived importance of trip characteristics, motivations that include:
education, age, gender and prior experience. Experiential outputs include: measured learning,
perceived learning and satisfaction. Pro environmental outcomes that can be gained include;
management preference’s, environmental concerns and behavior intentions. So, on the basis of
this, it can be said that Madrid’s region of tourism needs to focus on increasing awareness and
make people educated about tourism. By providing training to all workers and employees about
ways of satisfying as well as dealing with tourists, this sector can increase sale and can attract
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tourists. Age, gender and prior experience also plays a vital role and for increasing experience,
tourism sector needs to conduct survey so that it can gather information from tourism's and can
know as what was the main thing that increased their prior experience memorable. By gathering
information regarding tourism, it can add value and can increase experience of tourists.
Motivating tourist on the psychological basis or internal basis. The combination of both internal
and external factors increase the attraction of tourism industry,
Religious and Culture of tourism: Religious of tourism impacts in the motivation of
individual. While visiting destinations tourists interacts with the local peoples and the
interactions generates a relationship between them which results in the quality of life, change in
the attitudes of individual, creates family relationship. The cultural and the religious tourism
increase the strength of the tourism together. The common type of religious is pilgrimage, every
year there are 300 million pilgrims visiting tourism across the world. Pilgrims are considered as
the general tourism as there are no special needs of pilgrims have the same needs (Kim and King,
2020). The tourists of Pilgrims visit religious places, cafes and restaurants, shops, museum.
Madrid has an open space and its culture is friendly, entertainment culture and it works on
modern cultures. The cultural motivators is defined as the visitors choose to explore with the
different peoples and adapting different lifestyles. This connects the tourism to the destinations,
and they prefer to travel most destinations to learn from the other countries, histories,
individuals, lifestyle and traditions, etc.
Complexities of tourism industry in relation to importance of Globalisation
Globalization is the process with the help of which businesses especially tourism
organizations develop international influence via starting operating on an international scale. In
simple term, globalization is one of the ways through which companies can expand its businesses
at international level. Both Travel industry and Globalization is the powerful as well as the
unique force that leads to change across the globe. The impact and significance of globalization
over the tourism industry in Madrid region is highly positive as it leads to the expansion of sector
as well as rise of hotels and restaurants. But on the other side, it is also important to understand
that globalization created less distinctive locales which is one of the major complexities that
tourism industry in Madrid region is facing (Kyrylov and et.al., 2020). It is because due to
globalization, local and indistinguishable products are available as well as found in every
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country. The impact of which tourism unable to explore or purchase unique products at the time
when they explore Madrid region.
In this way, it can be said that lack of unique products became a tourism challenge for the
sector in Madrid city of Spain due to the increase in the importance of globalization. For
example, there are many malls and online shopping channels all over the world that offer
matching products to the travellers. Not only that, many travellers find standardized hotels all
over the world the impact of which they forget the country in which hotel is actually located.
Thus, it is important for the tourism sector to focus on more localization rather than globalization
in order to provide unique products and travel experience to the foreign tourist. The tourism
industry should focus on providing the unique and rare experiences to its guest through more
local products which the guest unable to explore and gain from other countries. For example,
Mercado culture is the most crucial part of the people lives in Madrid city, thus tourism industry
should keep this culture localize only in order to attract large tourist within the region via
ignoring globalization.
Globalization comes under the category of top five challenges or complexities faced by
tourism industry of Madrid region in the present world. It is because due to globalization, travel
companies or destination marketing organizations (DMOs) in Madrid are less focused towards
unique and rare products and services (Tolkach and Pratt, 2019). It is also important to
understand that depicting whether globalization is negative or positive to tourism industry in
Madrid is not an easy task. It is because despite many positive aspects of globalization to
economy or sector such as employing cheaper labour, high GDP growth rate, availability of
technological innovation etc. this has many negative impacts as well. The complexities that
sector is facing is low local standards. This means local standards do not exist any more. People
have forgotten about the origin of the local products. The travellers and tourist have started
purchasing goods from local shopping mall rather than local markets.
The tourism sector in Madrid is also facing issue related to lack of skilled workforce or
labour because of the globalization in tourism. It is because various tourism businesses such as
hotels and restaurants in all over the world have started hiring labour from foreign countries via
paying higher wages to them. The impact of which many skilled, experienced employees have
quieted Madrid based tourism businesses in order to start their career in foreign countries or
cities. That’s why it can be said that lack of skilled workforce due to movement of people from
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one place to another has faced by the various businesses operates under tourism industry in
Madrid (Balsalobre-Lorente and et.al., 2020).
The decrease in the number of local entrepreneurs because of the unfair competition is
also one of the complexities faced by tourism industry in Madrid after the globalization. It is
because of the bringing of various shopping malls within the cities by the globalization. Also,
because of the strong dependence of local systems on global world, the local restaurants, hotels,
market shops are unable to influence the decision of travellers about their destinies in Madrid.
This is one of major complexities that local businesses of tourism industry in Madrid region are
facing and which has impacted their overall business sales as well as profitability to the great
extent (Danish and Wang, 2018). It is also significant for the tourism sector in Madrid that they
create multilingual websites as well as the use translation services in order to connect with the
foreign tourists.
CONCLUSION
After summarizing the above information, it has been concluded that tourism industry of
Madrid region has faced various complexities or difficulties in the perspective of economic
dimension, stakeholders, tourists’ motivation as well as globalization. The report has concluded
how the lack of tourist’s motivations has created challenge for the tourism industry to operate
smoothly and enhancing growth in the Madrid city of Spain. The report has further concluded
that globalization in tourism has created challenge of lack of local experience, skilled workforce,
decrease in local entrepreneurs’ issue for the tourism sector in the Madrid city. Lastly, the report
has also concluded that using translation service is one way to connect with international
travellers.
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REFERENCES
Books and Journals
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EU amidst a booming tourism industry: accounting for the role of brexit and other crisis
events. Journal of Cleaner Production, 305, p.127117.
Altinay, L. and Taheri, B., 2018. Emerging themes and theories in the sharing economy: a
critical note for hospitality and tourism. International Journal of Contemporary
Hospitality Management.
Balsalobre-Lorente, D. and et.al., 2020. The effects of tourism and globalization over
environmental degradation in developed countries. Environmental Science and Pollution
Research. 27(7). pp.7130-7144.
Danish and Wang, Z., 2018. Dynamic relationship between tourism, economic growth, and
environmental quality. Journal of Sustainable Tourism. 26(11). pp.1928-1943.
Díez‐Pisonero, R., 2019. Airports and cities in the context of globalisation: A multidimensional
symbiosis in Adolfo Suárez‐Madrid Barajas Airport. The Geographical Journal. 185(4).
pp.485-497.
Dimitrovski, D., and et.al., 2021. Understanding coastal and marine tourism sustainability-A
multi-stakeholder analysis. Journal of Destination Marketing & Management. 19.
p.100554.
Kim, B., Kim, S. and King, B., 2020. Religious tourism studies: evolution, progress, and future
prospects. Tourism Recreation Research. 45(2). pp.185-203.
Kyrylov, Y. and et.al., 2020. International tourism development in the context of increasing
globalization risks: On the example of Ukraine’s integration into the global tourism
industry. Journal of Risk and Financial Management. 13(12). p.303.
Nguyen, T.S. and Mohamed, S., 2018. Stakeholder management in complex projects. In The 7th
World Construction Symposium (pp. 497-506).
Romero, S., Ruiz, S. and Fernandez‐Feijoo, B., 2019. Sustainability reporting and stakeholder
engagement in Spain: Different instruments, different quality. Business Strategy and the
Environment. 28(1). pp.221-232.
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Tolkach, D. and Pratt, S., 2019. Globalisation and cultural change in Pacific island countries: the
role of tourism. Tourism Geographies.
tom Dieck, M.C., Jung, T.H. and Rauschnabel, P.A., 2018. Determining visitor engagement
through augmented reality at science festivals: An experience economy
perspective. Computers in Human Behavior. 82. pp.44-53.
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