Travel and Tourism Report: Impact of Political and Economic Factors

This report delves into the travel and tourism sector, examining key historical developments, the structure of the industry, and the influence of governmental bodies and economic policies. It explores the impact of political changes, using Iran and China as case studies, and analyzes factors affecting tourism demand, including economic conditions, consumer preferences, and technology. The report also investigates supply-side strategies, particularly those of the TUI group, to meet changing demand. Furthermore, it assesses the positive and negative impacts of tourism on economic, social, and environmental aspects, proposing strategies to mitigate negative effects and enhance positive outcomes. The report covers a wide range of topics, including factors affecting demand, the supply side by TUI group, and positive and negative impacts of different factors, which are crucial for the growth of travel and tourism sector.

TRAVEL AND TOURISM

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Key historical developments in the travel and tourism sector..............................................1
1.2 Structure of travel and tourism sector...................................................................................1
TASK 2............................................................................................................................................1
2.1 Functioning of government and its bodies in tour and travelling industry...........................1
2.2 Influence of local and national economic policy on success of travel and tourism industry1
2.3 Implication of political changes in tour and tourism sector..................................................1
TASK 3............................................................................................................................................2
3.1 Factors affecting demand of tourism. ...................................................................................2
3.2 Supply factor by TUI group to meet effect of demand.........................................................3
TASK 4............................................................................................................................................4
4.1 Positive and negative impacts of different factors................................................................4
4.2 Strategies for decreasing negative and increasing positive effects of tourism......................5
CONCLUSION................................................................................................................................6
REFERENCES ...............................................................................................................................7
.........................................................................................................................................................9

INTRODUCTION
Globalisation is playing a crucial role in the development of travel and tourism sector.
There was a time when people only like to visit local destinations because they did not have any
knowledge about foreign places. Gradually, they got information about other famous travelling
sites. TUI is a leading company in the hospitality and tourism sector. They are providing their
services across the globe. This report will cover various topics like historical developments in
this industry (Moutinho, 2011). Impact of government on this sector will also be covered here.
Apart from that, influence of local and national economic policy will also be discussed in this
project. In addition to this, effect of demand and supply on tourism will be studied in this report.
TASK 1
1.1 Key historical developments in the travel and tourism sector
Covered in Poster.
1.2 Structure of travel and tourism sector
Covered in Leaflet.
TASK 2
2.1 Functioning of government and its bodies in tour and travelling industry.
Covered in PPT.
2.2 Influence of local and national economic policy on success of travel and tourism industry
Covered in PPT.
2.3 Implication of political changes in tour and tourism sector
Political changes play a crucial role in the success and failure of tour and tourism industry of a
country. If alteration is positive then people who have direct or indirect relation with industry
will earn benefit from it. But if it is negative then they may face severe loss in their pay which
can make a bad impact on their economic condition. To understand these effects, one can take
example of two countries, that is, Iran and China.
Iran - During the war of 1980, tourism in this country is declining dramatically. But
after the revolution of 1980, number of tourists started increasing (Hudson and Thal, 2013).
Most of the travellers visit Iran because of religious reason. Government of this country
analysed that they can earn high revenue by giving more attention to this region. Despite of
international tension, they implement their policies and generate employment in this sector.
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They did not bifurcate data of travellers who have come with their family for enjoyment and
pilgrims who visit there for religious reason (BerneGarcia-Gonzalez and Mugica, 2012).
Earlier, they were facing basic challenges like lack of infrastructure, communication, personnel
training, etc. In the year 2003, there were almost 640 hotels with around 63000 beds. They were
earning 1 billion US dollar yearly and their worldwide rank is 68. Currently, this industry is
contributing 1.8% in national employment but government is planning to increase it to 10%.
They understand the importance of this sector in generation of jobs. Political instability made a
lot of negative impact on this industry (Evans, Stonehouse and Campbell, 2012). Most of the
people from Iran migrated to other countries because they were not feeling secure in their home
country.
China – Before 1960, people did not even consider this country as an option for
travelling. China made a lot of restriction on entry and exit of travellers. But after sometime,
they opened their economy for investment and at that time, travel and tourist industry started
growing. Living standard of public started rising as middle class population has become
economically strong. This nation has done an impressive work in this sector. China was not
considered tourism destination but they invest lot of resources on their historical places like
Great Wall of China. They have removed various types of unnecessary restrictions so that
people can visit their country with tension free mind (Wu and Shi, 2011).
TASK 3
3.1 Factors affecting demand of tourism.
Tourism industry has been playing a vital role in the economic growth of the country. The
components for the effect in demand and supply of travel and tourism industry are consumer's
taste, income and cost of complementary goods (Ghimire, 2013). For example, the demand for
tourism drops with the increase in price of fare, condition of recession, out of style vacations, etc.
The basic factors affecting tourism demand are:
 economy with matters ranging from exchange rate, politics, environment and taxation.
 crisis and threats of natural disasters,
 demographic changes
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 migration effects
 rise in educational level
 product standardization
 pricing strategies
 technology and its effect on transportation, communication,and information, etc.
 the other behavioural factors trending includes motive, capacity to travel, freedom,
fitness, time, money and state of mind. These factors are predictable as well as related to
the market concern in respect of travel and tourism industry (Zapata and Hall, 2012).
The emerging factors that reflects the tourism demand are the changing nature of demography,
search for the information and deciding upon the tourism product (destination), low involvement
of skilled consumer, tour operators with overloaded information, few information sources of
required products. Variety in products and services generates interest in the minds of the
consumer's which are induced by strategies (Wu, 2011). Countries where political condition is
stable and government support travellers sees high growth in travel and tourism sector like
Spain. Their are some nations where people have issues relating to security and government
changes on continuous basis. Travellers do not like to visit these locations.
Price orientation, convenience, product quality rank with consumer and lower profit with high
market share are its dominant features. The desired demand factor can be achieved by reduction
in cost .i.e. reducing fixed and variable cost in hotel sector, airlines can reduce plane quota
available or rent them to other companies. Differential season pricing redistribute demand and
accommodation forms an integral part of the tourist destination in the supply of services and
products to the tourists. Exchange rates apart from cost influences the price levels. With floating
exchange rates complications arises which reflects the economic status of the country (Garín-
Muñoz and Pérez-Amaral, 2011). Therefore the tourist motivation can enable the industry in
realising the concerns and reasons for decline with changing tastes and fashions providing
knowledge and requirements of the world. Earlier Arab countries were known for their deserts
by now their demographic conditions is changing because places like Dubai is converting in
New-york. They are filled with skyscrapers.
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3.2 Supply factor by TUI group to meet effect of demand
It is of great importance to make evaluation of destination from the perspective of
demand or supply. From demand perspective the perceptions and interests of travellers in the
area are considered while supply perspective is based on the number and quality of available
products and services at a destination. A total impact of tourism industry are evaluated by the
government on the basis of number of arrivals (Guttentag, 2015). Tourism has struggled with
impact assessment without any consistency or requirement. A perspective in tourism has balance
the experience, quality and needs of the destination community. Taking into consideration the
impact on the economy, tax contributions, society and the environment generates a meaningful
data set. Counting tourists on arrival does not add up to the total impact but economic analysis of
the industry is made. Local business wants to be benefited from tourists,but it requires
understanding their needs, hiring right people, local sourcing (Roxas and Chadee, 2013).
Demand of customers are changing with time because they of various reason like technology,
income etc. They are ready to pay more money but they want best service available in market.
Government strategies guided by the positive contribution and issues needed to be
addressed. The total number of persons who travel and use tourist facilities and services at places
are shaped by the demand of destination and opportunities available. A quality product is
delivered based on sustainable principles for tourism development in response to product and
services in a destination when prices of supply go up. Their was time when people have to search
for different people for booking of hotel, cab, etc. but now one entity can provide all the services
and make plans for visiting various travelling destinations.
TUI Group have undertaken ground breaking work to meet the effects of demand. These
includes:
 collection of various data .i.e. financial, fuel use, supplier spend , electricity and water
use, employee well being, and guest spend data.
 Discussion with stakeholders .i.e. hotels, customers, tour operator, airport (handlers and
ground staff)
 analysis through various economic models, emission factors, valuation techniques etc.
adopting the above total impact approach gives the required perspective (Mammadov, 2012).
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TASK 4
4.1 Positive and negative impacts of different factors
In developing countries as well as in rural areas, tourism supports in giving various social and
economic benefits, but there are various negative effects also which are related with mass
tourism. The negative and positive effects of economy, environment and society can be
explained as follows:
Economic impact Positive effects: Employment in travel and tourism industry and in different other sectors
like retail and transport are some of the areas in which there is a creation of job with the
support of tourism industry (Lee and Brahmasrene, 2013). When the income is being
spend by consumers on goods and services, it supports in developing such effect through
which there is a generation of more and more jobs. In rural communities, small scale
industries take benefit of travel industry through which there is a generation of revenue
and profit. Revenues will be in form of airport or hotel taxes which can be used for
schools, housing and hospitals. China earned lot of money from these sources but Iran
failed to grab these golden opportunities.
 Negative effects: Jobs which are there in tourism sector are poorly paid, however assist in
increasing the cost of goods and services and also the local property's price (Khare and
Khare, 2011). Success of tourism is based on maintaining appropriate infrastructure and
cost, which is generally based on government. MNC organisations like chain of hotels
take benefit of travel and tourism sector and there are also some places which get
negative effect by terrorism and natural disaster which are dependent on tourism.
Social impact Positive effects: Festivals, traditional customs and handicrafts which are neglected
mostly, encouraged and preserved by tourism sector and also assist in developing local
community's pride (Shaw, Bailey and Williams, 2011). Different issues for global
awareness like human rights and poverty are also raised because of communication
among hosts and guests. Chinese culture got popular because of tourism sector. But on
the other hand no one any information about culture of Iran because people in this
country is still trying to complete these basic need like education, food, etc.
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 Negative effects: Behaviour of visitor sometimes have detrimental impact on life of local
community. Drugs problem, alcohol, congestion and crowding increase crime level which
are considered as some negative effects.
Environmental impacts Positive effects: With the help of ecotourism, conservation is being promoted regarding
natural resources like wildlife, rain forest which can be termed as tourism asset. Funds
that are produced from travel industry supports to preserve marines and animals (Lew,
2011).
 Negative effects: There are many harms to environment due to tourism as it provides
threat to natural and cultural resources that may include water supply, beaches, corals,
reefs etc.
4.2 Strategies for decreasing negative and increasing positive effects of tourism
Tourism which not managed properly creates many negative effects on environment of the
places of tourists. A new tourism style is termed as ecotourism which get accepted worldwide
and provide positive effect on environment and provides advantage to local communities
(Buckley, 2012).
Strategies for minimizing negative effects
 If tourists will reside with locals instead of residing in resorts and hotels, so that they will
able to gain information about lives of local communities and can understand their
culture.
 Information should be given to tourists regarding low impact on environment. This thing
can be developed if tourists will get proper education regarding this (Klint And et.al.,
2012).
 Tourist amount must be controlled so that there will be minimised damage on the
environment.
 There must be an enforcement of strict laws, which will assist tourists to understand what
kind of things must be bought to location that will not affect environment.
Apart from this, different positive impacts are also there due to tourism which can be defined as
follows:
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 With the help of tourism, there will be improvement in environmental administration and
planning (Cuccia and Rizzo, 2011).
 There will be maximization in educational programs and awareness of environment.
 There will be increase in security and enforcement of rules and regulations of
environment.
 Tourism helps in providing financial contribution and also supports in protecting
environment and developing local societies.
 TUI should tell customers about benefits of travelling, they should introduce them about
various kind of fun and knowledge that they can get at the time of visiting new location.
 TUI is generating employment is villages and bucolic areas.
 TUI should tell benefits of knowing culture of other culture to their potential clients, this
will motivate them to visit new and different locations.
CONCLUSION
From the above report it can be concluded that tour and travelling is a growing industry
which is providing employment to a larger number of people. Government of a country play
crucial role in success and failure of a sector. If they provide financial assistance to them than
they can perform much better. Their are various factors which can influence demand and supply
of customers like political conditions, economic situation etc. Advancement in technology is
provide support to this sector, service users can book their tickets, accommodation etc. facility
by using their mobile. It is also beneficial for travel and tourism companies before by using
technology, they can expand their market without doing much investment.
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