Analysis of Contemporary Issues Impacting Travel and Tourism Industry

This report delves into contemporary issues affecting the travel and tourism industry, focusing on India and the UK, along with a case study of the International Airlines Group (IAG). It explores challenges such as changing technologies, security concerns, and economic fluctuations in India, and terrorism and climate change in the Middle East and North Africa. The report analyzes IAG's response to market changes using SWOT and PESTEL analyses, evaluating its strengths, weaknesses, opportunities, and threats, as well as political, economic, socio-cultural, technological, environmental, and legal factors. It also outlines strategies for Iberia and Aer Lingus to adapt to industry changes, including service enhancements and cost management. The report further discusses the impact of these issues on the sector and the consequences of businesses failing to adapt, providing a comprehensive overview of the industry's challenges and strategic responses.

Contemporary issues in travel and tourism
industry
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Table of Contents
INTRODUCTION ...............................................................................................................................3
TASK 1.................................................................................................................................................3
AC 1.1 Issues driving change in the travel and tourism sector for India.........................................3
AC 1.2 Analysis of two different current issues by using appropriate methods and resources.......4
TASK 2 ................................................................................................................................................5
Attached in ppt ................................................................................................................................5
TASK 3 ................................................................................................................................................5
AC 3.1Analysis of International Airlines Group business response to change...............................5
AC 3.2 Strategies for International Airlines Group businesses' response to change.......................7
AC 3.3 Justification of the strategies...............................................................................................8
TASK 4.................................................................................................................................................8
AC 4.1Impact of issues and trends that drive change in the travel and tourism sector ..................8
AC 4.2 Consequences of businesses failing to respond to market change. ....................................9
CONCLUSION..................................................................................................................................10
References...........................................................................................................................................11
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INTRODUCTION
Contemporary issues in travel and tourism industry affect the popularity and beauty of
tourist destinations. It plays an essential role in the development and enhancement of nation by
contributing to its economy to a high extent. Due to various problems like lack of transportation,
security, quality services, proper accommodations, etc., people do not like to prefer visiting tourist
destinations (Buda and McIntosh, 2013). It is important for both; developed and developing
countries to take care of their places by handling and resolving all the problems properly and
effectively. It is necessary for the government of countries to take appropriate actions for handling
and controlling problems being faced by the tourist destination. By providing high quality services
as per the requirement and demand of customers, travel and tourism sector can control the arising
contemporary issues (Ashworth and Page, 2011).
For the proposed study, India and UK is taken into consideration where other assessments
are based on the given case scenario. Report focuses on current issues, trends and responses of
travel and tourism sector towards the change. Along with this, file includes strategies for handling
the change in an appropriate manner.
TASK 1
AC 1.1 Issues driving change in the travel and tourism sector for India
Travel and tourism sector is one of the most growing industries in the world. It is
contributing in the economic development of nations. It offers proper and effective services to the
tourists for satisfying them and making their journey memorable. There are various types of issues
which affect and influence the working of travel industry (Dickinson, Lumsdon and Robbins, 2011).
In India, its tourism is rapidly growing and very important for the economic development
and enhancement. There are various national policies and practices with respect to travel and
tourism industry. It results to provide effective services and proper facilities to the visitors. Along
with this, ministry of nation also maintains and manages the campaign of Incredible India. People
from various nations like to visit India due to its historical, popular, beautiful and attractive palaces
which include forts, beaches and many more (Fredman and Tyrväinen, 2010). Moreover, there are
some issues which are faced by the travel and tourism sector of India and these are as follows:
Changing Techniques: In the present era, technology is continuously changing and
improving. It is one of the main issues which are driving change in the travel and tourism industry
of India. Companies need to update their software and system time to time as per the current
requirement. Along with this, travel firms have to maintain their work processes and operations with
the help of effective techniques. This leads to provide quality services and simple access to the
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customers. Use of the latest technology also provides assurance of proper safety and security (Hall,
2013).
Increasing need of security: With the rising terrorism, tourists are demanding for proper
safety and security. They do not like to visit those places which have lack of proper security
measures. Travel and tourism sector of India is facing issues regarding the safety of visitors. For
resolving it, Indian government and other travel and tourism companies need to use CCTV, fire
extinguishers, fire alarm, smoke detector and many more for the safety and security of tourists
(Morosan, 2013).
State of economy: Rise and fall in inflation rates also drive changes in the travel and tourism
sector of India. It is a developing nation which highly depends on the tourism for development and
growth. Companies have to suffer due to changing and fluctuating rates of inflation. This influences
the working of firms due to which they face issues while delivering quality services to the
customers. All these processes affect the economic progress of India. Along with this, it is essential
for the Indian government to invest on tourist destinations for their improvement which will attract
more visitors (Lyons, K. and et.al., 2012).
AC 1.2 Analysis of two different current issues by using appropriate methods and resources
Travel and tourism sector is playing an essential role in the progress and improvement of
various nations. It is providing employment opportunities to the large number of individuals for
their economic support. Along with this, tourism of nations is creating awareness among diverse
people about their history and glory by making different tourist destinations available to visit. In
addition, travel and tourism sector is offering high quality services and products to the customers
with proper safety and security for increasing their satisfaction level and making them to revisit the
places (Scott, Peeters and Gössling, 2010).
With respect to the Middle East and North Africa, a great and large change is brought by the
travel and tourism sector. From the investigation of United World Tourism Organisation, it has been
found that tourism of Middle East and North Africa was not increasing from the last four years but
at present, it is developing and contributing in the economy of nation to a high extent. Large
numbers of tourists like to visit both the nations due to their historical monuments and natural
beauty. There is huge development in the travel and tourism industry of Middle East and North
Africa but still, there are some issues which are affecting their growth (Tsiotsou and Ratten, 2010).
These problems are explained as below:
Increasing Terrorism: In the present era, people like to visit safe and secured places.
Enhancing terrorism is creating fear among individuals and due to this; they do not like to visit such
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destinations. There are many attacks which have taken place in both Middle East and North Africa.
For example, people do not like to visit Algeria due to terrorist attacks in 2013 and 2014 which
creates risk for violence. In addition to this, various terrorist attacks have reduced the frequency of
tourists to visit the places. It is important for government to handle and resolve this issue for
increasing the number of visitors (Blanchard and Higgins-Desbiolles, 2016).
Climate Change: It is one of the urgent issues of both Middle East and North Africa which
is affecting its travel and tourism sector. Both the regions are experiencing rising frequent drought
and a looming water supply shortage situation. Most of the regions of countries are becoming hotter
and drier. Due to this, tourists do not like to visit the places of Middle East and North Africa (Water
is focus of climate change in Middle East and North Africa, 2015). Increasing temperature creates
health issues for the visitors and reducing water supply makes it difficult to survive. It is important
for the government of both the countries to handle this issue for the welfare of its people and
development of nation (Connell, 2013).
TASK 2
Attached in ppt
TASK 3
AC 3.1Analysis of International Airlines Group business response to change
According to given case study, strategy development team of International Airlines Group
(IAG) business is analysing the travel and tourism business environment for developing effective
and appropriate strategies. IAG is a Spanish-British multinational airline organisation along with
some mergers. It is one of the most popular airline company in world which serves to people of
various nations. The profitability and productivity of the organisation gets affected by various
factors. One of the biggest factor is frequent changes in the market which makes IAG to improve
and modify the functions and operations accordingly (Phillips and Moutinho, 2014). For proper
implementation of the changes at the required places, it is essential to analyse both internal and
external environment. With the help of this, company will able to identify whether it is in condition
to work as per the market change or not. It is necessary to conduct both the analysis in effective and
proper manner. Following are methods IAG needs to use for the analysis of inside and outside
environment (Isaac and Çakmak, 2014).
SWOT Analysis:
IAG has to use this method for determining the internal working conditions which is as
follows:
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Strengths Weaknesses
 It has skilled and talented employees
 Large number of experienced workers
 Having effective and proper monetary
assistance
 High position in domestic market
 Having reduced labour cost
 It has high growth rate (Fennell, 2015)
 It has improper tax structure
 It has strong competitive market
 Firm is not able to gain appropriate
return on the capital invested by it.
 Fluctuation in the prices of the fuel
affects the working of the company
(Cohen and et.al., 2014).
 Investment in the research and
development unit.
 Various small and medium scale
companies.
Opportunities Threats
 It can develop new and innovative
products and services for increasing
satisfaction level of the travellers.
 It can get good and leading position in
the international market (Kaminski,
Benson and Arnold, 2013)
 Constant enhancement in the level of the
income
 Option of expanding business in the Asia
Pacific for enhancing the market share.
 Changing laws and regulations with
respect to the taxes, interest rates, fuel
prices, etc.
 New business policies introduced by the
competitor Rynair and EasyJet
(Mowforth and Munt, 2015)
 Increasing cost of the raw materials
 Business risks in the external
environment
Table 1: SWOT of IAG
PESTEL Analysis:
IAG can use this method for evaluating its external environment which is as follows: Political Factor: Changing policies and practices affects the working of the IAG. If the new
policies are not appropriate for the company then in such case there are chances of
decreasing sales and profitability. It is difficult to understand political environment of each
and every country (Sharpley and Telfer, 2014). Economic Factor: Rise and fall with respect to the inflation affects the financial status of
the firm. It also results to effect the performance and working environment of the IAG.
Along with this, poor exchange rates also impact negatively on the profitability of the
organisation. The weak position of Pound minimises the amount of business travel (Perch-
Nielsen, Sesartic and Stucki, 2010). Socio-cultural Factor: Ageing population of UK increases the travel option as they have
more leisure time. It is essential for IAG to offer services as per the age and social life of the
people (Pizam and Smith, 2000). Technological Factor: Organisation has its own website with mobile application for
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booking tickets online. Along with this, there is self-service check in which helps in
conducting processes faster and in appropriate way. Environmental Factor: IAG follows the policy sustainable environment. It has changes the
engine of the flights for reducing the emission of CO2 by 20% (Environmental Impacts of
Tourism - Global Level, 2016).
 Legal Factor: All laws and regulations are followed by the IAG in appropriate manner. It
follows all the safety regulations for handling terrorist attacks (Xiang and Gretzel, 2010).
AC 3.2 Strategies for International Airlines Group businesses' response to change
According to the given case, IAG posses various businesses such as Iberia, Vueling, Aer
Lingus and British Airways. From these Iberia and Aer Lingus are one of the popular flights which
is offering quality services to the customers (Gretzel and Yoo, 2008). With respect to the change,
both the companies are efficient and appropriate strategies which are as follows:
Strategies of Iberia:
The company offers transporting passengers and freight activities along with the aircraft
maintenance, handling in airports, IT systems, in-flight catering and many more. The airline
company fly to around 109 destinations in 39 nations. For handling the changes taking place in the
market of the airline industry, Iberia is using effective strategy of cost leadership. The company
offers travelling in the affordable and low prices. This make travellers of all range and class to
prefer this flight. This strategy helps organisation in gaining competitive advantages and due to this,
it is world's third largest commercial airline firm (Evans, Stonehouse and Campbell, 2012).
Strategies of Aer Lingus:
It is second largest airline in Ireland. The company provides its services to the 82
destinations at international level. Aer Lingus is using strategy of new product and market
development for responding to the changes. With the help of this, organisation is offering
innovative and new high quality services to the customers for making their journey comfortable and
satisfactory. This strategy helps firm in developing trust and loyalty among the passengers. On the
other hand, Aer Lingus expand its business to new market for increasing business and profitability.
This helps enterprise in gaining global recognition among the diverse people (Troian and Gheres,
2012).
So, strategies of both the companies are effective and proper as per the requirement of the
change taking place in the aviation industry. With the help of these strategies both the organisation
can gain reputation and achieve their objective efficiently (Rogerson and Visser, 2011).
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AC 3.3 Justification of the strategies
IAG is the parental company of both the airline companies i.e. Iberia and Aer Lingus. Both
the firms work cooperatively for accomplishing their objective of getting leading position by
satisfying the customers with the help of high quality services. Aviation market is continuously
changing due to the various factors. It is essential for the airline industries to respond appropriately
and effectively to these changes for maintaining their position. In context to this, strategies used by
Iberia and Aer Lingus are effective (Kun, Suo and Yinghui, 2013).
With the help of competitive pricing strategy, Iberia is offering low price flight tickets to the
customers. Due to this, people of any class can buy the tickets as per their need and can enjoy the
fly. This strategy of the firm is its increasing sales, market share and profit margin. Organisation is
succeeded in accomplishing its objective of getting leading position in the market of Ireland. In
addition, firm is able to gain competitive advantages in the market due to this strategy. It results to
attract price sensitive individuals to prefer Iberia for their business, holiday or any other purpose
(Michopoulou and Buhalis, 2013).
On the other hand, strategy of new product and market development is effective for the Aer
Lingus. It helps firm in gaining trust, honesty and loyalty of the customers towards the services.
Company is able to make special place in the mind of people due to its high quality services.
Healthy and hygienic food of the flights impacts positively on the mentality of the passengers.
Along with this, Aer Lingus is continuously expanding its business to the new nations and regions.
This is increasing the popularity of the airline firm among the diverse individuals (Minnaert,
Diekmann and McCabe, 2011).
TASK 4
AC 4.1Impact of issues and trends that drive change in the travel and tourism sector
According to the given case study, I am working for the Myla Travel which is an
independent travel agency. The success and growth of the firm is noticed by various travel and
tourism companies like Thomas Cook and The Travel Network Group. Analysis of the impact of
issues and trends that drive changes in the travel and tourism sector is as follows:
Impact of issues on Myla Travel:
It is one of the successful travel agency offering luxurious travel facility of the customers. It
has 10 offices in United Kingdom. Thomas Cook shows its interest in expanding its operations and
functions with the cooperation of Myla travel. Along with this, Travel Network Group is also in
competition with the Thomas Cook for hiring Myla. So, if the Myla Travel wants to do mergers then
in such case, The Travel Networks is the best option for it. With the help of this, company will able
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to get immense market share. Along with this, Myla will able to offer innovative services to the
customers of diversified people. On the other hand, merger decision with respect to the Thomas
Cook will not beneficial for the Myla. This is because Thomas Cook is facing various issues and
has closed around 195 stores in Britain (Ashworth and Page, 2011).
Impact on the Thomas Group:
In case, Myla merges with the Thomas Cook, then it will be beneficial for the Thomas Cook
as it is facing various issues. With the help of Myla, Thomas Cook get an opportunity to regain the
reputation and brand image by offering quality services to the customers. It will able to manage
present condition with the cooperation of Myla Travel (Morosan, 2013).
Impact on The Travel Network Group:
In case, Myla merges with the Travel Network Group then both the firm will get huge
advantages with reference to the productivity and profitability. Both the organisation deals in
luxurious and premium packages which will be another plus point of this merger (Connell, 2013).
Thus, it is essential for Myla travel to take appropriate decision for the merger activity.
Effective decision can help firm in increasing its success and progress.
AC 4.2 Consequences of businesses failing to respond to market change.
Consequences of failing to respond to the market change for all the organisations is as
follows:
Impact on Myla Travel:
If Myla Travel fails to respond appropriately to the market change along and not take merger
with the Travel Network Group then in such case company will face huge loss. It is essential for any
organisation to respond according to the changing market and customer requirement. Any failure to
this can lead firm to a big loss which will not easy to regain. Along with this, Myla will not able to
achieve its objective of expanding business (Spenceley, 2012) .
Impact on Thomas Cook:
On the other hand, it is essential for the Thomas Cook to respond effectively to the change.
This will help firm in regaining its lost image and market position. If the firm fails to respond
properly to the change then it will be worse situation for it. It has to close more of the stores for
handling the situation (Isaac and Çakmak, 2014).
Impact on The Travel Network Group:
In context to the Travel Network Group, failure to respond to change will impact negatively
on its performance and market share. It will be best if the organisation take merger activity with the
Myla Travel. This will help in selecting appropriate strategies for handling the change.
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So, it is necessary for the organisations to analyse the situations and market properly before
implementing any strategy into the working environment. Along with this, by understanding the
customer requirement, organisations will able to take appropriate decisions for responding properly
to the changes (Richins, Johnsen and Hull, 2016).
CONCLUSION
From the above study, it is clear that there are various issues which is effecting the growth
and success of the travel and tourism sector. With the help of effective strategies, government of the
countries can handle the situation appropriately. Along with this, there are different trends available
in the market. By using them, travel and tourism companies can increase their sales and
profitability. On the other hand, it is necessary for the travel and tourism organisations to work
according to the market changes. Any failure to the changes can make them face huge loss.
Selection of proper strategy can help airline industries in accomplishing their objectives effectively.
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