Foundation Year Research Project (MGBBT0FYP): Inflation and Tourism

This research project investigates the impact of inflation on the tourism industry, with a specific focus on the UK market and a case study on Travelodge. The project begins with an introduction defining inflation, listing events that lead to inflation, and outlining the aims and objectives of the research. The main body of the project presents quantitative data on inflation, including consumer price indices and their trends, particularly in the UK. It then analyzes the negative and positive impacts of inflation on the tourism industry, considering factors such as changes in consumer prices, global economic trends, and the effects on tourism companies. The conclusion discusses strategies for managing inflation, such as exchange rate pegging and monetary targeting, and their relevance to the tourism sector. The research uses data and insights from various sources, including academic journals and online references, to support its findings and analysis.

RESEARCH PROJECT

Table of Contents
INTRODUCTION...........................................................................................................................3
a) Definition from research of inflation.......................................................................................3
b) list of events that can lead inflation.........................................................................................3
c) Aims and objectives of the research........................................................................................3
MAIN BODY..................................................................................................................................3
a) Quantitative data of inflation...................................................................................................3
b) Negative and positive impacts inflation can have on the tourism industry.............................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................1

INTRODUCTION
a) Definition from research of inflation
Inflation is the rate of inflation in prices over given period and it is typically a broad
measure such as overall increase in prices or increase in cost of living in country. Inflation can
not be measure by increase in costs of one product but also there are several products or services.
On the other side it has been analysed that the general increase in overall price level of goods and
services in economy (Meo, Ali and Masood Sheikh, 2018). According to Adam smith it has
been analysed that quantity of money and bank notes in circulation and quantity of bank deposits
subjects to check. Inflation can cause by global issues such as during covid-19 it is impacting
that inflation can cause by demand pull inflation can by consumer demand for products or
services. On the other side the costs of production increases at that times which impact by
increases in prices as well as in most of the cases it has analysed that there it can cause higher
price of products that can causes energy rises as well as it can increase the level of product. In
context to tourism sector it also affected by increases in prices of hospitality industry by
increases high prices of food production also which causes inflation as well as it is necessary to
focus on other aspect that is necessary for consider .
b) list of events that can lead inflation
There are different types of event which can lead inflation such as interest and global
events because higher interest rates refers as higher borrowing costs, people will eventually start
spending less. The demand for goods and services will drop that can also cause inflation to fall.
Similarly, to combat it is rising inflation in the year 2022 (Hang and Pham, 2020).
c) Aims and objectives of the research.
Aim- To investigate impact of inflation on travel and tourism company UK. A study on
Travelodge
Objectives-
 To analyse the cause of inflation in an economy.
 To assess the impact of inflation on tourism company.
MAIN BODY
a) Quantitative data of inflation
There are different by which inflation can be calculating in order to focus more on better
understanding of how inflations can be arise. From national and price indices it can be said that

the rate of inflation can be measure by price of goods as well as it can be improve service as well
as it help by include consumer inflation which can bes produce price inflations and house price
index. In context to UK it can be said that consumer price index include owner occupiers
housing cost which can be rose by 8.6% in 12 month to August 2022 down from 8.8% in july
(Inflation of national statistics 2018).
Then,largest upward contribution to annual CPIH inflation rate in the month of august
2022 that came from housing and household services which can be related to transport and food.
In the month of August it can be said that on the basis of monthly basis CPIH rise by 0.5% in
August 2021 as compared to rise by 0.6% in august 2021. By understanding the price quote data
and item which can be indices and price quotes which is underpin consumer price inflation
statistics now it is published by giving users unprecedented access to detailed data which can be
use in order to constructed in UK inflation figures. With the effect of January 2017, the
consumer price inflation publication, these data are published on a monthly basis showing the
latest month. It has been analysed that consumer price index can be include owner occupiers
housing costs which is rose by 8.6% in 12 month to August 2022, down from 8.8% in July and
despite 0.5% rise in th month to august 2022 (Scarlett, 2021).
In addition to this, annual rate was below 1.2% from April 2020, during first coronavirus
lock-down to March 2021. By this it is markedly to July 2022 before easing slightly in August
2022. In the month of July 2022 figure was the highest recorded annual inflation rate on National
statistics series which is begun in January 2006.

b) Negative and positive impacts inflation can have on the tourism industry
According to Athari and Alola, 2021 high inflation can cause significant factor in order
to affect tourism sector in order to develop countries. International tourism is highly susceptible
to changes internal such as prices and external such as global economics trends to industry. The
inflationary consequences of tourism can arise on the basis of different types of levels. Then,
retailers in tourist areas often raise their price and knowledge which can be continued in order to
find market among affluent tourists. Inflation in content to tourism destination can cause by land
values in order to generate additional value in demand for land. The extent to which inflationary
prices increases are compensated for local residents by economic benefits which can be
increased employment and income is uncertain. It is analysed that there are the biggest concern
for improving the business hospitality in order focusing on high prices which directly impact
travelling cost (Vuković, Zobov and Degtereva, 2022).
In order to struck by pandemic it has been analysed that there are some emergency
measures by which industry can commonly associate with travel and tourism sector which can
cause transportation, recreation and hospitality also due to this it impact negative in order to ace

different challenges in global inflation. On the other sides there are several factors which can
considered by looking sharp as well as it can increase in consumer prices that are directly and
indirectly which affect tourism industry (Jasim and Shafeek, 2022). On the basis of economic
impact it has been analysed that the negative impacts of tourism can be related to high inflation
which is one of the significant factor in order to analyse demand of tourism sector a well as
international tourism is mainly depends on the changes of prices and global economic trends. In
order to analyse the positive impact it has been analyses that it is necessary for focus more on
higher profit which help producers for products and help for providing better profit since selling
product at higher price. Then, it has been seen that investors and entrepreneurs that help for
receiving investment in productive activities. Also, it helps for providing employment in order to
provide benefit of better income as well as by increase in demand there are various factors
related to production which also increasing manpower. Those who are shareholder can get better
income during inflation so that it is help for getting better dividend (Meo, Ali and Masood
Sheikh, 2018).
CONCLUSION
For considering the emerging market of the economy it has been analysed that inflation
can be control while having negative inflation which are related to exchange rate pegging,
monetary targeting and inflation targeting. Then, in order to focus on exchanges rate pegging it
can be said that it can bes reduce by peg the value of its currency at large. There are some of
strategy which haves fixed value in order to exchange fixed value in some country as well as
inflation rate involving crawling peg or target in which its currency is help by allowing for
depreciate at steady rate so that it help solve the issue. The impact of the policy is being use is to
get the point related to sound currency which can be rallying on cry for monetary policy. On the
basis of recent case it is seen that it is necessary for reduces inflation so that it help by increasing
employment which help other to generate income effectively as well as it help for improving the
currency exchange rate (Shaari, Ahmad and Razali, 2018).
For example, for tourism company Travelodge UK has proved that value of currency
help in order to gain competitive advantages in order to protect own economic interest as well as
by fixed exchange rate it helps by keep country's exchange rate low with helping with exports. In
addition to this it has been analysed that there are exchange of variation which can affect by
relative price of goods and services in different countries as well as it is important in

international trade which also include international trade by inbound and outbound tourism.
Then, exchange rates are considerable by influence the tourist flows towards particular countries.
In context to economy it can be said that it is help by link between local and overseas market for
various goods and services. The price of imported goods can be help for change in value which is
include domestic products which can be help by importing parts and raw material. Then,
exchange rate can be impact by investment performance, interest rates and inflation which can be
extend in

REFERENCES
Books and journals
Meo, M.S., Ali, M. and Masood Sheikh, S., 2018. Asymmetric impact of oil prices, exchange
rate, and inflation on tourism demand in Pakistan: new evidence from nonlinear
ARDL. Asia Pacific Journal of Tourism Research, 23(4), pp.408-422.
Hang, T.T.B. and Pham, M.D., 2020. Where Beta is going–case of Viet Nam hotel, airlines and
tourism company groups after the low inflation period. Entrepreneurship and
Sustainability Issues, 7(3), p.2282.
Athari, S.A. and Alola, A.A., 2021. The (Un) sticky role of exchange and inflation rate in
tourism development: insight from the low and high political risk destinations. Current
Issues in Tourism, 24(12), pp.1670-1685.
Jasim, Y.H. and Shafeek, H.R., 2022. The impact of inflation and tourism services on
unemployment in Iraq for the period 2003-2018. Baghdad College of Economic
Sciences University Journal (BCESUJ), 68(4), pp.185-196.
Shaari, M.S., Ahmad, T.S.T. and Razali, R., 2018. Tourism led-inflation: A case of Malaysia.
In MATEC Web of Conferences (Vol. 150, p. 06026). EDP Sciences.
Meo, M.S.,Ali, M. and Masood Sheikh, S., 2018. Asymmetric impact of oil prices, exchange
rate, and inflation on tourism demand in Pakistan: new evidence from nonlinear
ARDL. Asia Pacific Journal of Tourism Research, 23(4), pp.408-422.
Scarlett, H.G., 2021. Tourism recovery and the economic impact: A panel assessment. Research
in Globalization, 3, p.100044.
Vuković, D.B., Zobov, A.M. and Degtereva, E.A., 2022. The nexus between tourism and
regional real growth: Dynamic panel threshold testing. Journal of the Geographical
Institute" Jovan Cvijic", SASA, 72(1), pp.111-116.
Online references
Impact of tourism on inflation 2018. [Online]. Available through
<https://www.rba.gov.au/publications/confs/1997/mishkin.html>
Inflation of national statistics 2018. [Online]. Available through
<https://www.ons.gov.uk/economy/inflationandpriceindices/datasets/
consumerpriceindicescpiandretailpricesindexrpiitemindicesandpricequotes>
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APPENDIX
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