Inflation Impact on Tourism: Analysis and Mitigation Strategies

This report examines the impact of inflation on the tourism industry, defining inflation and exploring its causes within an economy. It provides reliable statistics on inflation's effects in recent years, highlighting both positive aspects such as employment generation and infrastructure development, and negative aspects like reduced consumer buying power and supply chain disruptions. The report concludes by suggesting strategies for the tourism industry to mitigate the negative impacts of inflation, such as offering services at lower margins, managing supply and demand effectively, and developing long-term investment plans. This research emphasizes the importance of understanding and addressing inflation to sustain the tourism industry's growth.

Research project

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Definition of inflation and how this occurred in an economy....................................................3
Reliable statistics of the impact of inflation in recent years with the help of reliable sources. . 4
Evidences of positive and negative impacts of inflation.............................................................6
Conclude how tourism industry reduce the negative impact of inflation...................................7
CONCLUSION................................................................................................................................9
REFERENCES:.............................................................................................................................10
Books and Journals...................................................................................................................10

INTRODUCTION
In order to analyse about the particular topic, it is essential to carry out research which
provides relevant information and knowledge. It fulfil the purpose by providing appropriate
information and data that help individuals in accomplishing their projects (Binderkrantz,
Christiansen and Pedersen, 2020). High quality data analysis proves beneficial for students,
marketers and other individuals in gaining insights. Research provides the knowledge of facts
and figures related to the topic which provides opportunity for further improvement. This report
will discuss about the impact of inflation on tourism industry and solutions are provided in order
to overcome the negative impacts. The inflation is critically discussed and how it occurred in an
economy will be discussed in this report. Reliable statistics related to the impact of inflation is
mentioned in this report. Negative and positive impacts are mentioned along with the Gantt
chart.
MAIN BODY
Definition of inflation and how this occurred in an economy.
Inflation generally refers to the increment in the prices and rates of products and services
within economy. Unit of currency tend to buy lesser products and services when prices are
increased. The higher prices of products can be denoted with the help of particular percentage so
that common public can easily understand the actual rise in the prices (Blesia, Iek, Ratang and
Hutajulu, 2021). The purchasing power of buys directly decreases when they get their required
products at higher prices. It can be mainly classified into three different types which are cost
push inflation, demand pull inflation and built in inflation. The common inflation indexes which
are highly used are wholesale price index and consumer price index. The rate of change in
context to products and services decide the actual impact whether it is positive and negative. The
tangible assets such as stocked commodities and properties expect higher values due to the
inflation.
There are number of reasons present in an economy which results in inflation such as
increase in factors like production cost, wages of labour and cost of raw material and equipment.
The increase in the demand of particular product results in cause of inflation (Clark and Bryman,
2019). The circulation of money such as bank balances, coins and cash are increased in economy
which is responsible for the inflation. Another reason of inflation with in economy is devaluation

which can be referred as downward adjustment in exchange rate of country. It directly results in
lower down the value of the currency in country. Increase in the prices of variables such as
resources affect the production procedure.
Reliable statistics of the impact of inflation in recent years with the help of reliable sources.
Tourism industry faces various difficulties in generating revenues due to inflation in
economy. Although small rate of inflation provides benefits to the economy but higher inflation
affect the growth rate of overall industry in long run. Inflation becomes main cause of changing
the plans of individuals related to travel and tourism. In the recent past years after the lockdown
due to coronavirus, there can be seen huge difference in the rate of growth in tourism industry.
The arrival of monthly passengers in UK directly lower down from 6,804,900 during 2020
February to 112,300 in the April 2020 (El-Emam and Khamis, 2019). The fall of out of total
98.3% is evaluated which affect the growth of tourism industry. In the month of July 2022, the
consumer price index (CPI) of travellers in UK are increased by 37.1%. This was the positive
factor which help overall tourism industry in overcoming different challenges and losses. It is
analysed that inns, motels, hotels and other accommodations reportedly includes inflation in
2020 July with the increase in consumer price index by 15.5% as compare to previous year (Guy
and et.al., 2020). Gradually, tourism industry generating profits as customers tend to make plans
for their travels. They avail services which are related to the tourism industry which is positive
factor contributing in the growth of tourism industry. By developing appropriate plans and
policies related to the production, manufacturing, wages and rate of services, it improves the
performance of industry.

Evidences of positive and negative impacts of inflation
The level of inflation decides the impact which is measured according to the particular
criteria. Inflation tends to affect the growth rate of industry which should be focused by
individuals (Hilli, 2020). The rate of currency is declined which affect the buying pattern of
consumers. Different plans and procedures should be developed according to the situation of
industry so that impact of inflation can be controlled. Analysis of different factors are carried out
so that contingency plans are developed. There are some of the evidences are mentioned in
context to the positive impact of inflation are as follows:
Generation of employment: It is very significant impact of inflation which regulates the
rate of employment in society by generating number of job opportunities. Tourism industry hire
number of employees as they requires human resource in order to handle operations. It assist in
maintaining the positive level in economy by providing jobs. It reduces unemployment from the
society which improves the buying power of customers.

Development of infrastructure: It develops the infrastructure in better manner by
improving air services, rails and roads (Madsen, Aggerholm and Jensen, 2020). Other factors
which enjoys valuable growth includes telecommunication facilities and water supply in
different areas. Inflation assist tourism industry in building new facilities for their customers.
Negative impacts
There are various negative impacts are also identified which affect the operations of
tourism industry. Inflation can lower down the progress of tourism industry which should be
analysed. There are various negative impact of inflation which are mentioned below:
Low buying power: The rise in prices of goods and services creates negative impact on
the buying behaviour of consumers (Polonsky and Waller, 2018). It becomes difficult for them to
avail services related to tourism as they face challenges in managing their expenses. It is
challenging to afford the the expenses which are incurred during the travelling due to the higher
prices. Due to lower income level some of the customers changes their mind regarding the travel
plans.
Supply chain disruptions: It is difficult to maintain the appropriate supply chain in
tourism industry as rate are relatively higher. Number of resources, cost and material are used to
operate the supply chain for providing better services to the travellers. Sourcing of all these
resources are challenging for overall industry as the rates are higher. Various elements are
disturbed which results in discontinuation of supply chain.
Conclude how tourism industry reduce the negative impact of inflation.
It can be concluded with the help of research that tourism industry have to take necessary
actions so that they can overcome the problems related to inflation. The negative impact of
inflation results in lower down the revenue generation rate. The most common method for
controlling the inflation is contractionary monetary policy. It is used by government so that every
industry get benefits out of it (Shiller, 2018). Tourism industry can offer services on lower
margins so that they can attract large number of audience on regular basis. They can include
attractive offers in their services along with maintaining quality so that they can engage their
customers for longer period of time. The rate of supply and demand should be managed in
appropriate manner by maintaining proper reserves. Controlling prices to great extent for specific
goods assist tourism industry in increasing the demand in targeted market. Organisations and
service providers can offer discounts to their customers which increase their retention power.

Making plans for long term investments assist over all industry in making profits in long run as it
lower down the impact of inflation. Everyday expenses can be negotiated by the industry which
influence the interest and behaviour of the customers. Favourable schemes are developed by
them according to the segments and income level of individuals.

CONCLUSION
From the above report it can be concluded that research provides the guidance about the
topic for the further use. Facts are identified with the help of research so that the information can
be utilised for the development of required projects. This report discussed about the inflation in
economy. All the negative and positive impacts are evaluated so that actual position of inflation
can be identified. The reasons and rate of inflation are studied in this report with the help of
proper evidences. Actual statistics are gathered from past recent years which shows the impact of
inflation on tourism industry. There are various findings are mentioned which provides
appropriate solution for overcoming the negative impact of inflation.

REFERENCES:
Books and Journals
Binderkrantz, A.S., Christiansen, P.M. and Pedersen, H.H., 2020. Mapping interest group access
to politics: A presentation of the INTERARENA research project. Interest Groups &
Advocacy, 9(3), pp.290-301.
Blesia, J.U., Iek, M., Ratang, W. and Hutajulu, H., 2021. Developing an entrepreneurship model
to increase students’ entrepreneurial skills: An action research project in a higher
education institution in Indonesia. Systemic Practice and Action Research, 34(1), pp.53-
70.
Clark, T. and Bryman, A., 2019. How to do your social research project or dissertation. Oxford
University Press, USA.
El-Emam, R.S. and Khamis, I., 2019. Advances in nuclear hydrogen production: Results from an
IAEA international collaborative research project. International Journal of Hydrogen
Energy, 44(35), pp.19080-19088.
Guy and et.al., 2020. Defining and navigating ‘action’in a Participatory Action Research
project. Educational Action Research, 28(1), pp.142-153.
Hilli, C., 2020. Distance teaching in small rural primary schools: a participatory action research
project. Educational Action Research, 28(1), pp.38-52.
Madsen, K.L., Aggerholm, K. and Jensen, J.O., 2020. Enactive movement integration: Results
from an action research project. Teaching and Teacher Education, 95, p.103139.
Polonsky, M.J. and Waller, D.S., 2018. Designing and managing a research project: A business
student's guide. Sage publications.
Shiller, J., 2018. The disposability of Baltimore’s Black communities: A participatory action
research project on the impact of school closings. The Urban Review, 50(1), pp.23-44.