Detailed Report on the Travel and Tourism Sector's Analysis

This report provides a comprehensive analysis of the travel and tourism sector. It begins with an introduction highlighting the sector's importance and then delves into key historical developments, dividing them into pre-1945, 1945-1979, and 1980-present periods, illustrating the industry's exponential growth. The report then examines the sector's structure, detailing various components like airports, travel agents, and the emergence of new elements such as conference organizers. It explores the implications of political changes, using the UK's visa policies for Chinese tourists as a case study, and analyzes factors affecting tourism demand, including demographic, technological, and economic factors. Furthermore, the report discusses changes in supply to meet evolving demands, emphasizing the need for a balance between supply and demand. Finally, the report covers positive and negative economic, environmental, and social impacts of tourism, proposing strategies to minimize negative effects and maximize positive outcomes. The report concludes with a summary of the key findings and provides references to support the analysis.

The Travel and Tourism Sector

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................4
TASK 1............................................................................................................................................4
LO 1.1 Key Historical developments in travel and tourism sector..............................................4
LO 1.2 Structure of travel and tourism sector..............................................................................5
TASK 2............................................................................................................................................6
LO 2.3 Implication of political changes on travel and tourism sector.........................................6
TASK 3............................................................................................................................................7
LO 3.1 Factors affecting tourism demand...................................................................................7
LO 3.2 Changes in supply to meet changing demand.................................................................8
TASK 4............................................................................................................................................9
LO 4.1 Positive and negative economic, environmental and social impact of tourism...............9
LO 4.2 Strategies that can be used to minimise negative impact while maximizing the
positives.....................................................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

TABLE OF IMAGESINTRODUCTION
Travel and tourism industry has emerged as one of the key components of any economy.
Various studies and real life situations have stated that a country can grow and develop if its
travel and tourism industry functions at an optimal level (Holloway, 2009). Travelling has
become an integral part of everyday lives of people. Due to this reason importance of this
industry has increased manifolds in recent some years. The present report explores different
aspects of this sector. It sheds light on key historical developments and their impact on the travel
and tourism industry. Further a thorough discussion on influence of local and national
government and international agencies in UK have affected operations of the industry.
TASK 1
LO 1.1 Key Historical developments in travel and tourism sector
Over the years there have been numerous developments due to which this sector has
grown at an exponential rate. Its development through history can be divided into three parts:
“before 1945”, “1945-1979”, and “1980 to current day” (Sharpley, 2006). It is presented in the
following poster presentation.
From the above diagram it can be clearly observed that the travel and tourism industry
has undergone numerous changes which has helped it to grow at such an exponential rate. This
development, as per the diagram can be divided into three sections. Prior 1945 period can be
categorised as one where travel and tourism activities were either minimum or non-existent. It
can be supported through fact that it was exclusive only to the rich and elite class of people
(Tribe, 2005). Moreover during the 16th century majority of people made their living through
agricultural activities. Due to this, they seldom had the time to engage in travel activities. In
addition they did not had access to these engagements primarily because of lack of financial
resources. Similar trend continued during the 1950s as well. The tourism industry was rather
very inconsistent, as hotels, transport operators worked separately. But this all changed during
period of 1945-1979, as the tourism industry became more organized. At this time participants of
the sector started forming alliances and coordination with one another instead of working as
separate business units (Wang, 2009).
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LO 1.2 Structure of travel and tourism sector
The travel and tourism industry is one of the fastest growing sectors around the world.
Numerous analysts have predicted that the industry will continue to experience upward growth in
coming years. The following diagram represents structure used in the industry.
On basis of the above diagram it can be said that travel and tourism industry is one of the
most complicated sectors as there are numerous participants involved in it. This structure is not
very old and there are numerous elements which have very recently became a part of the
industry. One such component is the conferences and exhibition organisers (Ouerfelli, 2008).
Initially travel industry consisted of only three main parts: airports, travel agents and
accommodation. But with passage of time the industry grew and newer elements were added to
it. This continuous expansion at horizontal level is the main reason behind such profound growth
of the industry. Airlines and airports form the component which people use to travel by air. It is
the fast mode of transportation and the most efficient one as well. Travel agents are another part
of structure of the travel tourism industry. They can be called as link between all other
components of the sector. Travel agents develop and maintain relations with different travel and
tourism service providers and sell their services to customers as a complete package (Goh, 2012).
Conferences and exhibitions is the new part of this industry. Some service providers sell travel
packages to companies so that they can attend different corporate events. They aim at providing
complete travel solutions like accommodation, leisure, visitor attractions, etc. Business persons,
executives now a days travel all around the world for such purposes and they need to have easy
access to travel services. Considering this, many organizations have created their own travel
desks, so that employees find it a lot easier to travel from one place to another, whether local,
national or international. New forms of travel have emerged like sea travel. Road travel and rail
travel are some of the oldest format of travel (Araña and León, 2008). People have been using
them since years and they have found these to be very comfortable. In recent years, number of
people travelling by road have increased substantially, mainly because there has been an increase
in popularity fo adventure activities. Road travel is a part of it.
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TASK 2
LO 2.1 and 2.2 covered in PPT.
LO 2.3 Implication of political changes on travel and tourism sector
It is a well-known fact that travel and tourism is one of the most important business
sectors in the world. Its importance has increased in last some years. During the case it is clear
that political changes have a significant impact on the overall travel and tourism industry.
Decision taken by UK government to give visas to Chinese tourists will have a major impact on
country’s travel industry and eventually its economy as well (Gössling and et. al, 2012).
From the year 2016, UK would give new tourist visas that will be valid for a period of
upto 2 years instead of previous 6 months only. In addition, plans have been put into place to
introduce a 10 year multiple visit visas to Chinese tourists. As the Prime Minister Mr. Cameroon
said, main objective of this change in the visa and immigration policy is to attract more Chinese
travellers. The UK government has realised that China is its biggest market in terms of travel and
tourism business (Deluna and Jeon, 2014). Therefore by attracting more people from this Asian
country, government hopes to enhance performance of the industry and provide greater support
to the economy. According to the past data for years 2009-14 number of Chinese visitors in the
UK increased by 112%. During same time period spending by these tourists rose by 167%. As
per study conducted by Oxford Economics, in the next 8 years this spending amount by Chinese
tourists could increase by as much as 77% (Chen and Wang, 2007). It is a clear indication that
UK government’s decision to introduce the new visa and immigration policies can work wonders
and provide the best results for the country. This way its travel industry can sustain easily and
contribute significantly to national economy. If the forecast given by Oxford Economics proves
to be true, then this decision would be very useful and effective for the country.
There are various factors that motivated the government to take this decision. One of
them was that the Chinese tourists contribute nearly £500 million to UK economy every year
(Lin and Matzarakis, 2008). This means that if the country somehow is able to attract more
Chinese tourists then its economic performance can be improved significantly. The travel
industry is a major part of UK economy and thus the government needs to ensure that its
performance is as per set standards and pay attention to maintaining it. Due to this decision some
changes have been brought in the travel and tourism industry. For instance, new hospitality
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services are being developed so that demands and expectations of Chinese tourists can be
accomplished. It includes the likes of making hotel rooms perfect as per “feng-shui”, providing
Chinese breakfasts, employing either Chinese speaking staff or training the existing employees,
translated audio guides, etc. (Lucy, 2014). Government through these initiatives wants to make
sure that the tourists enjoy their visit and leave with a memorable experiences so that they visit
the country again. On this basis it can be said that political situations is one of the factors that has
significant impact on the travel and tourism industry.
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TASK 3
3.1 Factors affecting tourism demand
The demand of tourism products and services is an essential factor so it is necessary to
give special consideration and management for the travel & tourism industry. This demand
would define the number of tourists visiting a particular tourism destination. There are several
factors which affect tourism demand such as demographic and technological factors, emerging
technologies, political stability, globalisation, macro-economic factors like currency rate, interest
rates etc. These are explained as follows : Demographic factors – The changing demographic factors of customers have greatly
influenced the tourism demand as the tourists are having high spending power, number of
young consumers have increased and travelling frequency of consumers has increased
over the period of time. These factors are favourable and creating a positive impact on the
tourism demand. Technological: Online reservation system and availability of information on internet are
the major technological factors that has affected demand and as a result consumers are
becoming more informed and aware because they are able to get all information easily at
their home. Thus, increasing technology in travel & tourism industry have increased the
demand of tourism products. Currency rate fluctuations: The decline in currency prices of the destination country
would attract higher number of tourists as the money would have higher value in that
country (Assaker, Vinzi and O’Connor, 2011). For example - if prices of GBP fall as
compared to the US dollar this would result in higher demand for the tourism services of
UK as against in America and other countries having dollar as their home currency. Economies: There would be impact on the demand for tourism products & services due
to the economic conditions prevalent in the destination country as economic conditions
may vary from country to country. For instance - if a country is going through economic
crisis then there would be lesser demand for the tourism products and services as tourists
would be reluctant to make much spending (Hong, 2011).
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 Political stability: A country with high degree of political stability will attract more
tourists and as a result there be have high demand of tourists from all over the world. One
of the major reasons for increasing demand from tourists in UK is its political stability. Interest rate inflation: Inflation in interest rate would increase overall costing for the
money and their would be a hike in prices of the tourist products and services. This
would have an adverse impact on demand as consumers would be reluctant to spend more
money with the prevailing higher interest rates in the market.
 Globalization: With the increasing pace of globalization and movement of consumers
and service providers from one country to another, the trend of tourism has enhanced.
Thereby, inducing more and more consumers for travelling from one country to another
(McKercher, Chan and Lam, 2008). This has created higher demand for products and
services in tourism industry in UK.
LO 3.2 Changes in supply to meet the effects of demand
An industry can run smoothly only when balance is created between demand and supply
of the tourism products and services offered by a country. Both the government as well as other
stakeholders in tourism industry are required to put continuous efforts in order to strike a balance
between the two factors (Serquet and Rebetez, 2011). To manage the situation smoothly, supply
of the tourism products & services has been changed accordingly and stakeholders in the tourism
industry have also responded positively towards the increasing demand. There are several factors
which have been modified in order to meet demand for the tourism products & services such as
provision for accommodation, quality, service, seasonality, types of products and technology
deployed in travel & tourism industry.
Due to increasing pressure over accommodation, higher numbers of accommodations are
developed at the tourist places in order to manage increasing demand (Song and Li, 2008). To
ensure that tourists are able to get proper information and facilities at the destinations, tour
operators industry is taking efforts to grow significantly and manage the increasing demand for
the tourism products & services. In the present time, quality and service aspects are of prime
importance for the tourists and stakeholders in tourism industry have focused their attention on
these aspects (Eugenio-Martin and Campos-Soria, 2010). By increasing pricing for the peak
season and reducing prices in the off season, seasonality in demand for the products and service
can be managed, this would ensure that demand can be managed in off season as well.
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Technology is also one of the enabling elements in for managing the demand for tourism
products and service as with online reservation and online information, it has become quite
easier for the tourists worldwide to avail these services from their home country only.
TASK 4
LO 4.1 Positive and negative economic, environmental and social impact of tourism
Tourism industry is among one of the fastest growing industry in the world. Tourism
activities possess both benefits and limitations on the host countries which manage these
activities. There are various factors such as social, economic and environmental that have both
positive as well as negative impact on travel & tourism industry worldwide (Hamilton and Tol,
2007). The positive economic benefits of travel & tourism industry would include higher
income, higher employment, government tax base, higher taxation receipt, and increase in export
business, economic development and inflow of foreign currency for the host country. Negative
impacts of economic factors on travel & tourism industry would include higher cost of living,
inflation rate, and demand for public service, property taxes and higher dependency of economy
on tourism industry.
Conservation of the natural resources, planning, controlling, community revitalization
and maintaining quality of environment, beautification, are some of the positive impacts in the
context of environmental factors (Stepchenkova and Eales, 2011). The environmental factors
which are observed to have negative impacts on the environment would include the destruction
of flora & fauna of the host country, degrading landscape, impact due to pollution and adverse
effect on the natural resources which are scarce. In terms of positive impacts on tourism industry
due to the social factors can be in form of conservation of the cultural values of a country and
rehabilitation of monuments. Negative impacts of social factors on tourism industry would
include loss of domestic festivals. Also, the tourists coming to visit are from different countries
and may damage the local culture.
Focusing onto the cultural aspects, it can be said that the intercultural understanding and
globalization of culture are the major positive impacts sought by host country through tourism
activities. On the other hand, there are several negative impacts of tourism activities for social
factor such as commercialization of the traditional events, loss of local identity, local crafts &
skills etc. (Ng and Soutar, 2007). Thus, it can be analysed that the economic, political,
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environmental and cultural factors are having both positive as well as negative impact on the
travel & tourism industry. This results in helping the host country to understand and analyse the
overall benefits which would be sought through tourism activities. Moreover, the analysis of the
benefits and limitations of these factors would help it to understand the issues. This will enable
to propose solutions for the limitations of any particular factor in order to make the arrangement
to solve the issues faced in the organizational context (Song and et. al, 2010).
LO 4.2 Strategies that can be used to minimise negative impact while maximizing the positives
It is important for the host country that effective strategies are framed and executed in
order to deal with the negative consequences of the various factors such as political, economic,
environmental and cultural aspects (Cleanthous, 2008). The negative impacts caused due to
economical factors can be minimized by adopting the strategy of managing local standard of life
at manageable level. This would ensure that standard of living does not increase much for the
local people living in the area. Another measure that can be taken is inclusion of local people in
the economic policy so that the benefits can be provided to them also, which would help them in
handling the increasing prices. Diversification strategies can be adopted to reduce the
dependency on the tourism industry wherein there should be proper mix and dependency on
different sectors. This would ensure that there are no major impacts on the overall economy of a
country, if in any particular situation, one or few sectors are not performing as per expectation .
(Sharpley, 2006).
Different measures can be taken to reduce negative environmental impacts such as the
key policy can be developed to resolve conflict between access to natural resources and
environmental decay of the natural resources. A committee to be appointed to develop and
implement key policy in order to ensure the conservation of environmental factors. This would
result in the minimum possible environmental impacts by the travel & tourism industry due to
environmental factors (Gössling and et. al, 2012). In addition, to conduct the review of a
particular tourism destination in the country, environmental protection agencies should be
appointed. Based on the negative impact analysis on these tourism activities, they would frame
future policies concerning the environmental impacts for tourism sites.
People must remain dedicated towards adoption and follow of their culture only. The
negative impacts which are created due to cultural differences can be minimized by maintaining
a strong host country culture which possesses good understanding of the other culture also that is
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coming in contact to that culture through tourism activities. This would enable people of host
country to adopt their own culture and not get influenced by other cultures like from the western
and other culture which is brought by tourists coming from different parts of the world
(Moutinho, 2011). Further, active communication management, adopting use of the latest
technological equipment and development of monitoring tools in the travel & tourism industry
can prove vital for a country to ensure that there is the least possible negative impacts of all
environmental factors.
CONCLUSION
The travel industry plays a crucial role in the economy and development of any nation.
This is the main reason that countries around the world are taking many efforts and paying a lot
of attention for developing the tourism and travel sector and improve its performance. From this
study, it can be articulated that local and national government and also international agencies
greatly influence the travel and tourism sector. Over the years it has undergone a lot of changes
and development which can be understood from its history and structure. These eventually have
helped the industry to grow at an exponential pace. Lastly, it can be concluded that travel and
tourism industry has its own benefits and limitations. There are several factors such as social,
economical, technological, political and cultural which can have positive as well as negative
impact on tourism sector.
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REFERENCES
Books and Journals
Araña, J. E. and León, C. J., 2008. The impact of terrorism on tourism demand. Annals of
Tourism Research. 35(2).pp. 299-315.
Assaker, G., Vinzi, V. E. and O’Connor, P., 2011. Examining the effect of novelty seeking,
satisfaction, and destination image on tourists’ return pattern: A two factor, non-linear latent
growth model. Tourism Management. 32(4).pp. 890-901.
Chen, K. Y. and Wang, C. H., 2007. Support vector regression with genetic algorithms in
forecasting tourism demand. Tourism Management. 28(1).pp. 215-226.
Eugenio-Martin, J. L. and Campos-Soria, J. A., 2010. Climate in the region of origin and
destination choice in outbound tourism demand. Tourism Management. 31(6).pp. 744-753.
Frechtling, D., 2012. Forecasting tourism demand. Routledge.
Goh, C., 2012. Exploring impact of climate on tourism demand. Annals of Tourism Research.
39(4).pp. 1859-1883.
Gössling, S. and et. al., 2012. Consumer behaviour and demand response of tourists to climate
change. Annals of Tourism Research. 39(1).pp. 36-58.
Hamilton, J. M. and Tol, R. S., 2007. The impact of climate change on tourism in Germany, the
UK and Ireland: a simulation study. Regional Environmental Change. 7(3).pp. 161-172.
Holloway, J. C., 2009. The Business of Tourism. 8th Ed. Longman
Hong, W. C., 2011. SVR with hybrid chaotic genetic algorithms for tourism demand
forecasting. Applied Soft Computing. 11(2).pp. 1881-1890.
Lin, T. P. and Matzarakis, A., 2008. Tourism climate and thermal comfort in Sun Moon Lake,
Taiwan. International Journal of Biometeorology. 52(4).pp. 281-290.
McKercher, B., Chan, A. and Lam, C., 2008. The impact of distance on international tourist
movements. Journal of Travel Research. 47(2).pp. 208-224.
Moutinho, L., 2011. Strategic management in tourism. CABI.
Ng, S. I., and Soutar, G. N., 2007. Tourists’ intention to visit a country: The impact of cultural
distance. Tourism Management. 28(6).pp. 1497-1506.
Ouerfelli, C., 2008. Co-integration analysis of quarterly European tourism demand in
Tunisia. Tourism Management. 29(1).pp. 127-137.
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