Travel and Tourism Sector Report - Economic Impact Analysis

This report provides a comprehensive analysis of the travel and tourism sector. It begins with an overview of the historical developments in the industry, highlighting the impact of technological advancements and changing social dynamics. The report then delves into the structure of the sector, detailing the roles of various components such as tour operators, transportation, accommodation, attractions, travel agents, and guiding services. It further examines the influence of government, government-sponsored bodies, and international agencies on the tourism sector, as well as the impact of local and national economic policies. The report also investigates factors affecting tourism demand and how supply has adapted to meet these demands. Finally, it assesses the positive and negative impacts of tourism on the economy, environment, and society, proposing strategies to minimize negative effects and maximize positive ones. The report covers various aspects of tourism, including its economic contribution, the role of government, and the factors influencing demand and supply within the industry.

THE TRAVEL AND
TOURISM SECTOR

TABLE OF CONTENTS
Introduction......................................................................................................................................3
Task 1...............................................................................................................................................3
1.1 Historical developments in the travel and tourism sector .....................................................3
1.2 Structure of the travel and tourism sector.............................................................................5
Task 2...............................................................................................................................................6
2.1 Function of government, government-sponsored bodies and international agencies in travel
and tourism .................................................................................................................................6
2.2 Local and national economic policy influences the success of the travel and tourism sector
.....................................................................................................................................................7
2.3 Implications of political change on the travel and tourism sector.........................................8
Task 3...............................................................................................................................................9
3.1 Factors affecting tourism demand .........................................................................................9
3.2 How supply has changed to meet the effects of demand ....................................................11
Task 4.............................................................................................................................................11
4.1 Main positive and negative impact of tourism on economy, environment and society.......11
4.2 Strategies which can be used to minimize the negative impact and maximize positive once
...................................................................................................................................................13
CONCLUSION..............................................................................................................................14
Reference.......................................................................................................................................15

INTRODUCTION
Travel and tourism is the fastest growing industry and major source of economic
development of the country. It plays a vital role in increasing foreign exchange earnings and
enhancing employment in the countries. It helps to promote culture and nationalization globally.
Tour operators arrange packages for tourists and provide accommodation to enhance the interest
of public towards the holiday travels (Adhikari and Bhattacharya, 2016). It can be described by
three major concepts; the overall movement of people, economic source, enhances relationship
between countries and provides facilities to tourists. Travel can be International, domestic,
national. This business is operated by many tour operators which arrange tour package for
different travels like for domestic travel there is domestic tour operator, for international travel
inbound operators are working.
Present report will focus on the developments in tourism over the past years and will
explain structure of travel and tourism sector. Government and sponsored bodies, political
changes affect the tourism. This report will cover several influences of government and political
changes on the tourism business. There are so many factors which affect demand and supply of
business, these factors will be evaluated in this report (Domínguez, Fraiz and Alén, 2013).
TASK 1
1.1 Historical developments in the travel and tourism sector
Travel and tourism nowadays is a fast growing economic source of the country. Landon
is working in tourism sector since 1960. Technologies, transportation, internet facilities have
been improved to the great extent which have given this business a huge success. Earlier there
was no internet so people were unable to book their reservation online but due to up gradation in
technologies now manual booking has turned into online bookings. After Second World War one
thing positive happened was the introduction of aircraft technologies, it increased the demand of
tourism all over the world.
Recently social life as well as working timings has been changed so that people are
getting time to spend with their families and they plan to visit places or go on holidays (Dredge
and et.al, 2015). Earlier, working hours were approx 40hour in a week but not it is 36 hours and
also now technologies in home have become advanced like washing machines, microwaves are

used by every individual. This saves times. In 1994 channel tunnel opened is London; it was best
for those who want convenient access to France or other cities. Due to changes in government
policies regarding money exchange, it made currency exchange procedure easy which also
enhanced the tourism globally. Travel has increased due to Privatization like Virgin company is
working between two countries Manchester and London and tourists are very happy with the
quality and cheaper services of this company.
Infrastructure has been developed to the great extent (Ghimire, 2013). Hotels, resorts etc
are built and services are improved so that it can attract tourists to come and visit such places.
Tourism significantly impact social life, natural resources, pollution and economic conditions.
International tourist arrival have increased approx 1.1 billion and expected to reach 1.8 billion till
2030. Due to improvement in technologies, timing, social conditions, infrastructure etc. London
is expected to be the first biggest earner in tourism. Source of income of public is now getting
high which helps them to invest the money in holiday packages.
Parameter Value
International tourist arrivals 6.11 mn nos (P)
Foreign exchange earnings US $ 11.39 bn
GDP contribution 45.50%
Illustration 1: Illustration 1: Inbound tourist arrivals and growth in Landon

Revenue US $ 48 bn
Travel and tourism business have huge contribution in country's economic development. Income
sources, culture, infrastructure have been developed in London to the great extent and also now it
has become the most popular holiday destination all over the world (Hall, Scott and Gössling,
2013). These developments help in developing the economy of the country.
1.2 Structure of the travel and tourism sector
Travel and tourism industry is one of the finest industries working in country and
contributing economical for the development of the country. Employment has been increased
and skilled persons are working in travel business and are providing effective products and
services to the tourist. Structure is made up of various components which are inter-linked and
performing their functions. Structure is divided into various major categories:
 Attractions
 Transportation
 Tour operators
 Travel agents
 Accommodation
 Guiding services and information
Tour operators: Operators are the producers of the tourism business. They arrange travel for
tourist and provide them all facilities related to the travel. There are number of operators working
in the tourism industry (Hossain, 2015). Domestic tour operators; It arranges holiday package for
the residents those who belong to the same country and travel within it. Outbound operator:
Arrange travel for the person who belongs to one country and is traveling to another. Inbound
operator: It organizes tours for non residents and specialist in organizing destination tours like
Thomson.
Transportation: Transportation is main part the tourism business. Whenever company
organizes a tour it is very important to know the route of the destination, air lines, railway lines
etc. Mainly, it depends upon income source of the visitor either he wants to go by air flights,
train or cars. National Express carries many tourists in every month (Hudson and Thal, 2013).

Sea ferries have become very popular in tourism so people like to go by this. Companies have
tie-up with several airlines so that easy booking can take place.
Accommodation: Catering and accommodation include food, hotels, guesthouses etc.
Company includes lunch, dinner, breakfast facilities, and hotels booking etc. in their packages
and all these facilities are designed as per the budget of the visitor (Klint and et.al, 2012). The
operator has low budget then operator make arrangement in simple hotel or if the budget is high
then five stars hotel are booked by the company.
Attractions: Location's history culture, geography is very important as the tourists are
mainly attracted towards it. Natural attractions like lakes, climate and tourists generally prefer to
visit such places which have good atmosphere and climate so that they can enjoy such location.
Holiday package include visit natural parks like heritage coasts, parks etc.
Travel agents: There are so many Travel agents those who are working globally. These
agents are the link between operator and visitor. Operator provides package and agent explains
and sell such product to the tourists (Mariani and et.al, 2014). Tourists can directly communicate
with agents and can also tell their requirements and wants so that package can be designed as per
their need.
Guiding services and information: Tour operators have to follow such guild lines
which are given by regulatory authorities. It is very important to have proper communication
between operator and visitors. Tourists have all guidelines by the organizer so that they should
have clear guidelines about departure time, hotel reservations, visit places etc.
TASK 2
2.1 Function of government, government-sponsored bodies and international agencies in travel
and tourism
Local government and government sponsored bodies work to establish policies which can
be useful in tourism industry. Government tries to develop public sectors which can improve
infrastructure and security for the tourists. Local government ensure that infrastructure should be
in a manner that can attract more visitors in the country. Government of London has developed
such policies by this way London is now one of the best attractive country in tourist prospective.
Security is the main objective when ever visitor plan to go in particular country, he first look

upon safety side so government plays a vital role to protect outsiders as well as local public
(Nelles and Ladsous, 2014).
Sponsored bodies includes into its practice planning and necessary research which can
advertise country globally. These bodies ensure that trade regulations should be followed by the
companies. To implement theses regulations in practice, it organizes training programs and
educate people for improving tourism in the country. National tourist board, regional trusr board
are some government sponsored bodies in London.
International bodies (IB) ensure that ethics of tourism is developed by organizations and
should be implemented globally (Padilla and et.al, 2012). It is very necessary that diverse culture
should get respect in host country and other. IB try to develop effective infrastructure and
working ethics improve to enhance tourism all over the world. IATA (International air transport
association) is one of the international body which works to develop safe transport of air.
UNWTO (United Nations world tourism organization) is great international agency in UK which
collect data and analysis the trends and growth of tourism and by analysing it plans to develop
tourism in the country. ABTA (Association British Travel Agents), WTTC
(World travel and tourism council) etc. are some bodies which are continually working in the
development of travel and tourism in the country.
Role of government is concern with law and order, defence, communication, respect
culture, develop infrastructure and overall development of economy of the country (Page, 2014).
Two main functions perform by government and its bodies that is micro and macro function.
Macro function of government involves strategies and policies into practice for sustainable
growth and development of social, economic growth. Micro function involve leadership to
promote destinations, coordination and enhance creativity which can attract more visitors in the
country.
2.2 Local and national economic policy influences the success of the travel and tourism sector
Tourism is an essential industry in London. It increases employment for development of
tourism in the country. London is a big country and tourism is contributing more than 7% in
GDP. Economic policies can directly and indirectly affect the travel and tourism. There are so
many economic policies like monetary policy, fiscal policy which affects tourism in the country.
Influence can be direct and indirect:

Direct influence
Travel and tourism sector directly get affected by local and national economic policies
(Scott, Hall and Gössling, 2016). It helps to develop infrastructure in the country so that people
get attracted towards country. London promotes culture of the host country all over the world. It
provides safe environment to tourists so that they can feel comfortable in the country.
Indirect influence
Local and national economic policies indirectly affect the success of tourism. Monetary
policy affect the world bank indirectly this will affect the exchange rate of currency. Foreign
exchange will be increase and because of that tourist need to pay more money for travel package
so it will impact on over all business of tourism. If exchange become easy then fluctuation of
currency will be profitable for the visitor and then they will pay less amount for travel. Thus,
over all business affects by monetary policy. Fiscal policies are related to taxation and all these
also affect the business of the industry.
Local policies are related to local development of infrastructure, culture development,
hotels services improvement etc. National policies are related to fiscal and monetary policies.
Both polices affect the economy of the country and can increase or decrease the business of
tourism. Monetary policies should be in a manner that can enhance the foreign exchange in the
country. World bank consider this thing and implemented point and reduced exchange rates.
Easy visa policies is made so that traveller can easily can get the visa and can travel all around
the world. Some times these policies negatively affect the business like airport security services
some times became poor at that time people avoid to travel in such country (Spenceley, 2012).
2.3 Implications of political change on the travel and tourism sector
Political changes impact on tourism sector, these changes have huge impact on the
tourism industry. Fundamental changes can affect the security system of the country. This
creates negative impact on the mind of visitors and they might be avoid to visit such unsafe
places. Egypt and some other countries have political turmoil now, ATM machines are empty in
many places, because of these issues visitors get demotivated to travel in such countries.
Positive implications of political changes improve the infrastructure and security services
in the country so that people come to visit places. Political parties promote country's culture and
attraction points so that visitors like this place and plan to come in the country. After attack by

terrorists political parties focused to patrolling the streets and major tourists sites. With this
action visitors feel safe in the country. Infrastructure development taken place due to the political
change thus facilities and services provided by owners became effective. It gives positive
enhancement of tourism industries. Lack of unity between several political parties give chance
to attack to terrorists. Instability of political party is also a main point where visitor think to not
to go in the country. Political background explains environment of the country, culture of the
country and also ethics follow by the country (Standing, Tang-Taye and Boyer, 2014). Tourists
would like to go in such places which have less legal boundaries, easy to access, have strong
securities and also many points of attraction like lacks, malls etc. London has so many attracting
points like London eye; historic tower, for kids there is sea life Landon aquarium; related to
science and technology.
Good political leader enhance the infrastructure and security in the country. Leader
organize events to promote host country culture in the Landon by these ways local public will
feel safe and also outsiders will find themselves secure and can enjoy the place.
TASK 3
3.1 Factors affecting tourism demand
There are so many factors which affect the demand of tourism, these factors directly or
indirectly affect the business of the industry. Being a part of TUI group, it was observed by the
manager that these factors negatively affect the demand of tourism and inflow and outflow of
tourists get affected by theses factors.
 Demographics
 Technologies
 Political factor
 Macro-economic factor (Currency exchange rates, inflation, income level)
 Environmental factors
Demographics changes
It affects tourism worldwide. Rising population, urbanization, migration, change in
family structure etc. are some major factor which affect demand of tourism.
Visitors like to visit clam places and avoid going in high population countries. Rising in
population negatively affect the tourism demand. These changes in demography impact upon

kind of tourists, where they want to go, from where they belong etc (Swain and Mishra,2012). As
per the report of UNWTO demographic factors affect tourism like younger people like to go on
holidays to get relax.
Technological factor
Mobile devices, Internet, computers etc. are some major technologies has been developed
which are helpful to enhance business. Now days every body is using internet and suffering
travel packages on internet and also book tickets online. This technological growth increase
demand of tourism and save time of visitors, manual booking and searching take so much time.
Face book, Twitter have increased connectivity with the operators (Tourism Structures, 2015).
By this way people get to know regarding several operators and offer packages by them, this
help in knowing most convenient tour packages. TUI managers need to be skill and educated to
deal with these latest technologies. These devices help to advertise company's product which can
attract customers and increase demand of tourism.
Political factor
Political stability is very important to enhance the demand of tourism. Political parties are
able to develop infrastructure in the country (Zapata and Hall, 2012). They can provide security
and can make places safe. Political parties organize events to promote culture of the country
these enhance the demand of tourism. But on other hand unstable government decreases the
value of tourism people avoid going in such places where government is having instability.
Macro-economic factor
Economic factors are here which affect the demand of tourism. Inflation decrease interest
of tourist to travel. Recession also decrease interest of travel among people. Exchange rate of
currency affect the demand of tourism like if exchange rate reduced then currency exchange will
be cheaper that will enhance the demand of tourism in the country and if exchange rate get high
then it will costly and people avoid going on holidays (Swain and Mishra,2012). Income level of
the persons are also considered a main aspect which affect the demand of tourism, if people is
having less sources of income then they will avoid going on trips and save money but id having
good income sources than will be able to go on holiday tours. So by this way if will affect the
demand of tourism.
Environmental factors

Climate of the country attracts tourists in the country if it is good but if not appropriate
then people avoid going in such places.
3.2 How supply has changed to meet the effects of demand
Tourism industry is required to make balance between demand and supply
(Investigating the travel and tourism industry, 2015). As demand is necessary for the growth
same as supply is playing an important role for the enhancement of the industry. Government
and sponsored bodies are working to make balance between demand and supply. There are so
many factors which help to meet with the demand. These factors are accommodation, quality,
services, type of product, Seasonality, tour operators etc.
To meet demand top authorities or government bodies continually working to provide to
develop accommodation facilities in the place (Swain and Mishra,2012). Tour operators are
providing good food facilities, clean and safe hotel facilities so that demand and supply can be
managed well. Tour operators are providing quality services to their customers or visitors so that
they feel good and plan again to travel in the same destination. Product design is main part of
travel, designing of the package take place in a manner that can fulfill the demand of visitors.
Package involve destination, transportation, accommodation etc. these all design as per
the budget of traveler so that he get satisfy with the travel (Tourism Structures, 2015). In season
time demand of visitors remain high so that it to be managed with increasing price if it is season
time and should be decreased in off season. Technology also a major factor which help to meet
with the demand. Internet is the easiest way to find all information regarding reservations and
booking by this way tourists can get all information about destination and other services.
TASK 4
4.1 Main positive and negative impact of tourism on economy, environment and society
In country like UK tourism sector is regarded as one of the major source of income which
is growing at faster pace. Further, in London many destinations are present which are famous
and posses’ capability to attract large number of visitors (Swain and Mishra,2012). Apart from
this, different kind of positive along with negative impact of tourism is present on environment,
society along with economy. The real impact has been shown below:
Positive impact

 Employment: Tourism sector of London is generating employment opportunities for
individuals living in the society. Further, large number of activities are present such as
sky-diving along with water sports which provides employment to local people living in
the society (Tourism Structures, 2015). For instance direct employment is present in
terms of people who are offering water sports activities and indirectly individuals have
been hired who are indulged into activities of repair and maintenance. Direct and indirect income: Tourism activities in London are considered as major one in
generating income. Further, tourists arriving from other nations are paying money which
directly enhances the income level and contributes in development of nation (Zapata and
Hall, 2012). Apart from this, ticket along with other services rendered acts as good
income source. Contribution to gross national product: GNP is regarded as the overall value of products
and services which has been received by country in one year. Apart from this, rate of
GNP allows in knowing the rate of economic growth. GNP of London is quite high and
this shows that demand for tourism services is increasing at faster pace and this is fruitful
for the entire nation.
 Conservation of natural areas: Concept of tourism is also supporting in environment
protection where majority of the firms in London are focusing on Eco-tourism
(Investigating the travel and tourism industry, 2015). Further, main focus is on promoting
areas which are natural and they are protected in every possible manner.
Negative impact Loss of amenity and increasing crime: Apart from positive impact of tourism it has
some negative impact on society as it is leading to rise in level of crime within London.
Many individuals are arriving from one country to another and they are indulging into
illegal activities. So, overall rate of crime is increasing at faster pace.
 Pollution and damage to natural resources: Rise in demand for tourism services is
leading to increase in level of pollution and natural resources are being damaged at faster
pace which is totally unfavorable for country like London (Tourism Structures, 2015).