Travel and Tourism Sector Analysis: Historical and Economic Impact

This report provides a comprehensive analysis of the travel and tourism sector, focusing on its historical development, structure, and economic impact. It begins with an introduction to the sector's growth and significance, followed by an examination of its historical evolution, particularly in the UK, and the key milestones that have shaped the industry. The report then delves into the structure of the travel and tourism sector, outlining the roles of various components such as attractions, transportation, and accommodation. It further explores the functions of government and international agencies in supporting and regulating the industry, and the impact of local and national economic policies on its performance. The report also analyzes factors influencing tourism demand and supply, and evaluates the positive and negative impacts of economic, social, and environmental factors. Finally, it proposes suitable strategies for increasing tourism and concludes with a summary of the key findings and recommendations.

Travel and Tourism
Sector

INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Historical development in travel and tourism sector.............................................................1
1.2 Structure of travel and tourism sector....................................................................................2
M1................................................................................................................................................3
TASK 2............................................................................................................................................3
2.1 Functions government and international agencies.................................................................3
2.2 Impact of local and national economic policy.......................................................................4
2.3 Connotation of political changes on travel and tourism Business.........................................5
M2................................................................................................................................................5
D1................................................................................................................................................6
TASK 3............................................................................................................................................6
3.1 Factors affecting tourism demand.........................................................................................6
3.2 Changes in supply to meet the effects of demand.................................................................7
M3................................................................................................................................................7
D2................................................................................................................................................8
TASK 4............................................................................................................................................8
4.1 Positive and negative impacts of economic, social and environmental factors.....................8
4.2 Suitable strategies for increasing the tourism........................................................................9
D3..............................................................................................................................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Travel and tourism is one of the fastest growing sectors in the world. Every person now
wants to roam and explore new places around the world and because of this sector is developing
faster. This is considered as one of the important sector in the company since they are
contributing in development of economy as well. If the economy of the company will be
developed then the country will also be considered as a developed one (Wang and et. al., 2012).
Travelling now-r-days has become a part of people's life because there are so many beautiful
destinations that one can look for. Another reason that lead to the growth of the industry was the
improvements that they have introduced in their sector as well s various new travel agencies
have also come up to plan a smooth holiday package for their clients. This report covers two
scenarios. The first one is related to history and changes that have been introduced in Britain and
the other one is related to Travel and tourism in London.
TASK 1
1.1 Historical development in travel and tourism sector
Travel industry can be considered as one of the biggest economy drivers in the economy.
The growth and development that has been occurred in this sector is far more than other sectors
like Retail, manufacturing etc. They are providing so, many job opportunities which is helping in
the development of economy. From ancient times only people are interested in spending their
money in travelling but there were not much facilities due to which people generally avoided
travelling much. The history of tourism sector ion UK can be understood as:
The era from where the tourism began was in the time of the Romans. This was the time
when people started to go for their holidays to the sea side or for spa etc. It was around in
13000BC. During this time, the most popular tourist destination was Acropolis in Athens. The
government of UK have always introduced the importance of tourism in UK and that is why they
have introduced so many laws and policies for the same (Chen, 2011). One of them is the:
HOLIDAY PAY ACT which was enforced in 1938. It provided paid holidays for the
working class people and it was a result of a 20 year campaign. This act lead to the popularity of
holiday camps such as those run by the Butlins.
Until 1950, this sector was slowly and slowly developing themselves in transport, hotel
etc. . These hotels used to provide rooms to the people who come to visit the places. Other
1

sectors that were growing are the airlines and, buses etc. 1945 were the time, in which growth
and development of travelling industry was started (Deery, Jago and Fredline, 2012).
During 1950, there were boost in certain factors like – improvement in holidays of
customers, good deals on tour packages. There was a fast development in air transport business.
Below mentioned is a timeline chart for key historical developments in travel and tourism
industry: -
Time line Activities
16th century At this time, only few people were know about the travel and tourism
activities. Individuals did have enough money to spend on travelling
activities. Along with this, in 16th century there was only a few tourist
destinations.
18th century In 18th century, rich people had taken a grand tour of Europe going to Italy
and further cultural centres. For rich families, it was fashionable to go spa
towns and enjoy a season of ball parties. Also the lake District was become
tourist destination for the artistic souls looking to enjoy the picturesque views.
19th century In the mid of 19th century, there was a revolution of railways; it made tourism
faster. The Stockton and Darlington railways was opened in 1825. At this
time several were encouraged towards tourism activities.
20th century At this time, transportation was greatly improved. Tourism were involved in
accommodation, transportation and other activities in order to provide
maximum satisfaction level to people. It was increased the number of visitors
also. Many tourism sites were established in 20th century.
21st century Now the area of travel and tourism services is raised due to airways. Now
people spend more money on travelling activities.
Grand Tour – It was a traditional trip that was mainly undertaken by upper class European men
as well as women . This custom was started from 1960 and carried out until rail transport was
started in 1840.
Spa Tourism – It was a habit that was developed in Romans which they learned from Greeks.
These baths became centres for recreational and social activities in Roman communities. The
2

government of UK now take full advantage of the facilities that are given by the Spa centres of
UK. They attract customers from all over the world by telling them about the best spa services
offered by economy of UK.
Olympic games in Greece – It was founded in 776 B.C . earlier it was considered as a part of
religious festival religious festival to honour Zeus. In this married women were not allowed to
participate and even attend the Olympics. These games increased the no. of visitors in UK and
thus improved the tourism sector in the economy.
1.2 Structure of travel and tourism sector
The structure of an organization plays an important role in defining the roles and
responsibility of people who are working in the company. the structure of travel and tourism
sector is being design by the government , there are various sector present in this which includes
transportation, accommodation ,tour operation and wholesalers , attraction , meeting and
events ,travel agents , through this organizational structure the companies are able to attract more
and more customers from the target market. The factors which are included in this structure are:-
Attraction – There are so many attractive places that are present in UK and which helps
in bringing more customers to the country . It is considered as one of the most important part of
the structure of travel and tourism sector. For ex – there is London Eye, Buckingham palace,
tower bridge which acts as strong attraction which brings lots of customers for visit.
Transportation – it is very important in development of travel and tourism sector.
People used various means of transport to arrive at their destination. There are various types of
transportation service that are used by the customers of the target market. These include airways,
Buses, railways.
Accommodation - it is another important factor in travel and tourism sector. Tourist
who used to travel needs a stay and relax. There are many hotels which provide accommodations
to tourists. Along with this through accommodation the tourist also used to get good food and
Beverages. Examples of accommodation are hotels, resorts, camping grounds.
Information and coordination – whenever a tourist visit a place they require some
information about the place they are visiting so the tourism sector helps the in this they provide a
proper guide to the tourist or they provide tourist information centre from where the tourist can
collect all the necessary information they require (Erkuş-Öztürk and Eraydın, 2010). Tour
3

operation and wholesalers – These are the people who provide bulk services to target customers
in the form of packages which includes flight expenses , accommodation , tours attraction etc.
The TUI group also changed their working pattern so that they can attain target
customers through which their profit margin can get increase and their organisation will further
introduced at the global level.
Sectors in travel and tourism industry
Public sector- In this sector the main role is played by the government since they are
present to introduce various changes and developing this sector as well (Evans, Stonehouse and
Campbell, 2012). The economy of UK implemented department of digital , culture and media
ans sport(DCMS). This department helps in driving growth, improves life and promote Britain in
other countries. It was a department that was created by government of UK for promoting and
protecting culture and artistic heritages and help businesses and communities by highlighting
Britain as a fabulous place to visit.
Private sector – In the private sector of travel industry has perform various services
which are;
Manpower planning for tourism sector
Qualities standards
Product development and diversification
Marketing and promotion plan
M1
The structure of travel and tourism sector in UK is very effective they are having a simple
and straight structure because of which the target customers find it easy and so tourism in UK is
increasing they are providing the best services to their customers and are having good
accommodation and transportation facilities with them so that the customers should not face any
problem while travelling to UK.
4

TASK 2
2.1 Functions government and international agencies
Government plays a very important role in developing the travel and tourism sector
because their support will not be there then the industry will not be able to grow at all. It is
because of the government only that new companies and new services are being opened up in
this sector because of which the sector is growing continuously (Goeldner and Ritchie, 2012).
There are various strategic decisions that are taken by the government which has helped the
country in its social and economic development. But the industry will not grow with just the
introduction of these strategies, lots of intervention in other sectors by government is also
required and they are :
Economic
Cultural
Social
Industrial
Infrastructure
The functions performed by government and international agencies are:-
National Government – the role played by national government in development of travelling
sector is very crucial. They provided help in this sector in various ways like by providing better
transportation services to te customers, opening more and more luxury hotels, efficient
hospitality services etc. They tried their best to introduce best changes in the country so that
more and more customers are attracted (Heung, Kucukusta and Song, 2011).
International Organisations – There are so many international bodies that are Present in UK
which includes both Government and government sponsored bodies. Even if the cooperation
between the operational levels is effective still it will be hard for the tourism sector to sustain and
organise in the market. If the country is an industrialised one then it will not be focussing on
Tourism sector.
United Nation World Tourism Organisation:- This is a specialised agency of UN and is also a
leading international organisation in the fields of Tourism. Through this, WTO has made various
5

efforts in order to make good connections with the commercial as well as non-government
factors.
2.2 Impact of local and national economic policy
The local and economic policies play a very important role in the success of travel and
tourism industry of a particular country. There are so many economic policies that are used by
government with which the tourism industry gets affected in a positive way. The government can
make a separate fund for the tourism industry which can be used by them for increasing the no.
of visitors and handling the person expenditures of the travellers’ who are visiting UK. With the
help of these funding the government of UK can also develop the tourist destinations that have
become little obsolete but can be improved.
There are so many other policies also that can be used by government to improve the
tourism sector in the economy (Kimbu and Ngoasong, 2013). Few of them include visa and
immigration policies, visa offices , government permission to foreign investors to invest locally,
government granting permission to people to enter into another country on the basis of their
skills, better facilities for the travellers etc.
UK government has formed various laws and policies so as to protect the rights of the
visitors. They also participate actively in growing suggestions on budgets and interest rates and
other activities that will contribute in growth and development of this sector. These policies are
formulated in both local as well as international level so as to achieve economic growth. These
policies also put a huge impact on religion, amenities, lifestyle of customers. . Destination
marketing is one of major government policy in which UK's government has provided separate
fund for this sector (Látková and Vogt, 2012). Apart from this, national policies also put a
negative impact on travel and tourism business. As TUI is operating in several countries, then if
government has changed legal policies and working. Afterwards, people does not prefer to visit
these location. This can hamper sales and profitability of travelling companies and they cannot
achieve their goals and objectives in an effective manner.
2.3 Connotation of political changes on travel and tourism Business
There different political situations in different countries that effect the tourism sector. In
UK also the political situations present in the country is affecting the travel and tourism sector.
Political environment plays an essential role in an organization and its roles and responsibilities
are different as per the nature of the country. The sectors which are involved in political
6

environment are economical growth, development and employment etc. travel and tourism sector
is linked with the political environment in a way since tourism sector helps in making a new
identity of the country at international level. Those countries who are having uncertain political
conditions have to now change their policies so that they can include this sector in their
economy.
This sector helps in raising fund at the national level by bringing foreign currency in the
economy. These foreign exchange reserves are used by the government to deal with the
international customers who are visiting the country. If there is any change in the policies of the
company than it will affect the travel and tourism sector also it may make them more efficient or
it may bring them down also. Since UK has voted itself out from the European Union it has
affected the travel and tourism industry heavily. The number of people who used to visit from
Europe to UK is more than double than that of the visitors who visit from rest of the world so Uk
should try to promote their tourism in Europe also so that they can get more numbers of visitors
from there (Medlik, 2012).
M2
There are various theories and techniques that were introduce in UK for analyzing the
function of government body one of them is “Evolutionary theory” in which it was determine
who is the head of house like in every country it is their government. These theories were of a
great help for the new companies who are opening in this sector.
D1
From the above study we can conclude that local and national economic policies effect the
success of travel and tourism sector in UK. This can be said because major policies of the
government are framed by keeping tourism industry in mind and thus if any changes occur in
these policies then travel industry will be effected by the same.
TASK 3
3.1 Factors affecting tourism demand
There are various factors that are affecting the tourism demand in the company. These factors are
playing an important role in increasing the demand of a particular destination (Moutinho ed.,
2011). These factors are divided into the following categories that are described below:-
Economy
7

Politics
Crises and Threat
Demographic Change
Technology
Price
Quality
All these factors can be linked directly with the tourism demand. If a country is having
good economic conditions then it will more no. of customers than that country whose economic
condition is low. Few of the economic factors which affect the tourism demand in London are
inflation, deflation, recession etc. Along with this the change in customer preferences is also
affecting the demand of the tourists.
The detailed analysis of factors affecting demand in London is given below:-
Economy: If the currency rates of UK are high then the demand of tourists will increase. Other
factors are like level of income, purchasing power of customers etc.
Crises and Threats: These factors cannot be controlled by anyone and so the tourism sectors
should be prepared to face the situations like this. These are the natural factors which affect
cannot be controlled (Mowforth and Munt, 2015).
Technology: This factor is used tourism companies to expand their business in market all over
the world. If they are making use of good technology then they will be able to catch more
customers and can promote their business also. They can promote the beautiful locations of
London via internet.
Demographic change: If there is any demographic change in London then it will also impact the
demand of tourism because it may create problem for the visitors in settling down (Peeters and
Dubois, 2010).
Quality: The type of packages provided by the tourism companies also affects the demand
because if the packages are attractive and exiting then it will attract more and more tourists but if
it is not attractive then it may cause loss to the company.
3.2 Changes in supply to meet the effects of demand
For achieving good supply in market, it is very important for the companies to fulfil the
demands of customers effectively. They should have a target to reach the equilibrium point
8

which is Demand = Sales. The supply can be modelled by using five independent factors which
includes:
Transportation
Services
Attraction
Information
Promotion
For creating a demand in tourism sector, the famous tourist destinations of London
should be promoted well so that more no. of customers is attracted towards it. If the tourism
companies want to gain higher competitive advantage then they will have to focus on changing
their supply chain. With the help of this they can easily achieve their goals and objectives within
the time specified. The company will need to hire skilled staff so that they will prepare good
promotional strategies for promoting the various destinations of London all over. Various
effective tools are used by the company. Foe e.g. if Tourism industry wants to improve the
demand of the industry then they will have to bring some changes in themselves like the hoteliers
who are connected with the tourism industry should try to improve the hotel rooms and services
also so that the customer are attracted towards it. This will help them in creating the demand for
the customer and when the customers will visit, it will increase their supply also (Saha and Yap,
2014.).
M3
There are Various sector which effects the travel and tourism sector are like the taste of the
consumers, their choices, cost of complimentary goods etc. these factors bring many changes in
the company economy. If any changes are introduced in this sector than it will bring changes in
the tourism sector as well it has the power to change the economy of country also.
D2
If the government of UK wants that supply should meet the demand in London than they
should take proper special care of the people who are visiting the sited place.
Telecommunication, transportation, accommodation etc are the infrastructures which are require
by the tourism industry. A wide range of suppliers who are providing services to the tourism
sector fits the supply change easily
9

TASK 4
4.1 Positive and negative impacts of economic, social and environmental factors
Tourism industries are considered as one of the fastest growing industry in the world. Al
the activities that are performed in this are having its benefits as well as limitations (Seetanah,
2011). The factors like social, economic and environmental are having both positive as well as
negative impact in the industry.
IMPACTS Economic Effects Social Effects Environmental effects
Positive It brings direct
employment in
tourism industry as
well as other sectors
as well.
Small scale industries
take benefit from
Tourism industries so
as to create extra
revenue.
The traditions present
n the country can
attract many
customers from all
over.
The customers who
come and visit the
host country, take the
beauty and culture
with them and spread
it all over through
their words of
appreciation.
Through Ecotourism
conservation of
wildlife and natural
resources is done.
Funds generated
through these types of
tourism are used in
developing the animal
wild life etc.
Negative Tourism jobs are
considered as
seasonal and poor
also.
Its success depends on
infrastructure and cost
of the country which
is usually dependent
on government.
Sometimes the
visitors have some
bad habits that create
a bad environment in
the host country.
To develop new hotels
in the country for the
visitors. The local
peoples are removed
from their native
places.
It is a threat to
region’s natural and
cultural resources.
Pollution through
traffic and garbage is
increasing.
10

4.2 Suitable strategies for increasing the tourism
In order to decrease the negative impact of tourism and increase the positive impact,
various steps have been taken by the host country. The negative impact can be decreased by
managing the local standard life at managerial level so that the standard of life of people is not
increased much (Chen, 2011). Local people should also be included in the economic policies so
that they re also benefited by the same. Diversification strategy can also be used so that not
people are dependent on the tourism industry.
The negative impact of environmental effects can be reduced by developing various
policies in favour of environment so that there is less depletion of natural resources and various
environment protection agencies should also be created by them.
D3
If the government wants to solve the negative impact on tourism in London and maximizing
the positive impact then they should use various strategies through which tourism industry will
develop. For instance, strict laws should be enforced in the country so that any tourist should not
bring any unnecessary item so that no problem will be faced by everyone .
CONCLUSION
From the above report, it can be concluded that travel and tourism industry is one of the
fastest growing sector. They are having a very rich history that has faced many iisues in their
decades. This sector was not much popular in the past but now they have grown so much. They
are contributing heavily in increasing the nation’s economy. It is promoting economic growth,
increasing trade and is also creating higher disposable income. With the help of this report,
tourism industry can be understood in detail and the various factors also that has lead to the
development of this sector. This report discusses about the historical developments that have
occurred, structure of this sector, functions of government bodies in promoting this sector,
effects of supply and demand in this sector and also the impact of travel industry on economy as
well.
11

REFERENCES
Books and Journal
Chen, M. H., 2011. The response of hotel performance to international tourism development and
crisis events. International Journal of Hospitality Management, 30(1). pp.200-212.
Deery, M., Jago, L. and Fredline, L., 2012. Rethinking social impacts of tourism research: A new
research agenda. Tourism Management. 33(1). pp.64-73.
Erkuş-Öztürk, H. and Eraydın, A., 2010. Environmental governance for sustainable tourism
development: Collaborative networks and organisation building in the Antalya tourism
region. Tourism management. 31(1). pp.113-124.
Evans, N., Stonehouse, G. and Campbell, D., 2012. Strategic management for travel and
tourism. Taylor & Francis.
Goeldner, C. R. and Ritchie, J. B., 2012. Tourism: principles, practices, philosophies (No. Ed.
12). John Wiley and Sons, Inc.
Heung, V. C., Kucukusta, D. and Song, H., 2011. Medical tourism development in Hong Kong:
An assessment of the barriers. Tourism Management. 32(5). pp.995-1005.
Kimbu, A.N . and Ngoasong, M. Z., 2013. Centralised decentralisation of tourism development:
a network perspective. Annals of Tourism Research. 40. pp.235-259.
Látková, P. and Vogt, C. A., 2012. Residents’ attitudes toward existing and future tourism
development in rural communities. Journal of Travel Research. 51(1). pp.50-67.
Medlik, S., 2012. Dictionary of travel, tourism and hospitality. Routledge.
Moutinho, L. ed., 2011. Strategic management in tourism. Cabi.
Mowforth, M and Munt, I., 2015. Tourism and sustainability: Development, globalisation and
new tourism in the third world. Routledge.
Peeters, P. and Dubois, G., 2010. Tourism travel under climate change mitigation constraints.
Journal of Transport Geography. 18(3). pp.447-457.
Saha, S and Yap, G., 2014. The moderation effects of political instability and terrorism on
tourism development: a cross-country panel analysis. Journal of Travel Research. 53(4).
pp.509-521.
Seetanah, B., 2011. Assessing the dynamic economic impact of tourism for island economies.
Annals of Tourism Research. 38(1). pp.291-308.
12

Wang, X., and et. al., 2012. Effects of the high speed rail network on China's regional tourism
development. Tourism Management Perspectives. 1. pp.34-38.
Online
Tourism Management – Introduction, 2017. [Online]. Available through:
<https://www.tutorialspoint.com/tourism_management/tourism_management_destinatio
n.htm>.
13