The hospitality industry is a broad category of fields within the service industry that includes lodging, restaurants, event planning, theme parks, transportation, cruise line and additional field within the tourism industry. In this case chosen company is TUI (Touristik Union International) which is a German multinational travel and tourism company headquartered in Hannover. The present study is emphasizing on all the macro and micro factors that highly influence the cited organization. Moreover it will also cover how the economic growth influences practices of hospitality and tourism sector. The main aim of TUI is to create unforgettable holiday experiences. As an integrated travel group, its brand offer complete range of services associated with holiday and travel. Three business sectors include TUI travel, TUI hotels & Resorts and Cruises from the world of TUI.
There are various external environmental factors that influence the tourism and hospitality industry. These factors are:
Economic factors: In any tourism industry it is much more essential to know the economic growth, interest rates, exchange rates and the inflation rate of country. Exchange rate policy plays an important role in the international tourism and trade. It will affect the cost of exported goods and price of imported goods in an economy (Webster, 2000).
Political factors: It includes different goods and services which the government wants to provide known as merit goods as well as those products which government does not wants to provide. In any tourism and hospitality industry it is essential to follow different policies owned by government such as tax policy, labor law, tariffs, political stability etc. tourism in an y country directly affected by countries reputation and several security stiff reasons. Different terrorist attacks also affects the perception of tourists (Reisinger and Dimanche, 2010).
Social factors: Different trends in social factors influence the demand for company's products and area in which company operates. It mainly includes different cultural aspects of the industry as well as population growth rate of country. Perception of people are changing day by day and it also includes changing attitude of people towards safety and environment.
Technological Factors: Technological shifts mainly affects the cost, quality and lead to innovation. In tourism and hospitality is much more essential to adopt various latest and technological advancements. They can further maintain good relation with all their customers by making their online presence and global booking system (Nickson, 2013).
Environmental factors: Most of the time changes in weather and climate highly effect the growth of tourism industry. Furthermore, growing awareness of climate change is much more essential as it will directly affects the business operation of the company.
Legal factors: It mainly includes different government rules and legislations. Different environment law, health and safety law, employment law etc affect the business operation of company as well as the demand for its products (Mehmetoglu and Normann, 2013).
There are various economic factors that currently influence the tourism and hospitality industry. Inflation rate of the country as well as interest rate of company's products affects the firm's cost of capital. Moreover, the exchange rate of the country influence the cost and price of imported goods in an economy (Lennon, 2003). Economic factors highly includes highly complex structures with its external and internal markets.
In any tourism and hospitality industry these factors are the key element for its growth and success rate. It includes the pace of economic development, the purchasing power, fiscal and credit policies, the currency rates etc. It will highly affect the demand and income of the company. Sometimes, the local economy of the country have its negative affect on the high tourist potential. The major factor that influence the tourist rate is high taxation policy owned by government (Prideaux,Moscardo and Laws, 2006). People in today's time are much more conscious about the money and the high number of taxes is one of the crucial factor that will leads to decreases the growing rate of tourism. Direct or indirect taxes affects almost 70% on income in the tourism sector. Furthermore, Globalization have its direct impact on the economic factors of the company (Lane, 2007). It provides the world class business with unlimited opportunities and it will have its positive impact on the business operation of TUI. In today's recession time companies are positively as well negatively affected.
To know the impact of variable factors it is necessary to use PESTLE analysis which includes political, economical, social, technological, legal and environmental factors affecting TUI.
First is political factor which state terrorist attacks result in stiff security reasons and strict immigration laws. If the foreign and commonwealth office put some destination off- limits after these terrorist incidents, travel insurers would refuse to cover tourists. Tourism is directly affected when tourist attacks affect tourist perception (Callot, 2006). On the other hand political instability can negatively affect TUI. Taxation policies on tourism by different countries have a major impact on the tourism industry as government provides subsidies and tax exemptions to promote tourism so it will positively affect TUI.
Economical factors include exchange rates which play crucial role in international tourism and trade. Considering the scenario of Euro is decreasing the gap with pound sterling may affect the outbound tourism from UK to other European Union nations and this could definitely affect the tourism agents (Bharwani, 2012). On the other hand globalization provides the world business with unlimited opportunities it will have positive impact on TUI as barriers are less. But on the other hand there are some threats present in the market like increased competition, maintaining quality and services etc. competition will be tough when barrier to entry become low. Similarly current recession can positively and negatively impact on TUI. Economic crisis is the major threat which results in collapse of some major players in the industry.
Socio cultural factors include life style, brand consciousness and changing attitude towards safety and environment (Crick, 2011). Life style has positive impact as TUI offers customized holiday packages which include selecting packaged tours and individual travel component, online booking facilities to meet customer expectations. On the other hand as TUI has good brand image in the mind of customers so it will have positive impact as all their requirements are fulfilled. Changing attitude towards safety and environment can negatively affect TUI as survey was conducted which shows customers attitude of “going green” which organizations somehow neglects. So in order to change customer perception company has to update its environmental policy.
Technological factors refers to the advancement in services like TUI services are based on online and internet, selling is done with the help of modern techniques. It will have positive impact as if we see form customers point of view then it becomes easy to plan holidays (Patil, 2003). On the other hand online sales cut costs by reducing staff and intermediaries, it also possess threat to companies. But on the other hand advancement is increasing which creates negative impact as tourism agencies use of TV hotlines and telephone (call centers) facilities for maintaining their customer relationships.
Legal factors include government rules and regulations. Government recommended a wide range of regulation on Aviation safety and Regulations. This covers domestic, environmental, health and consumer issues. This will have negative impact on TUI services as it becomes hurdles in working as TUI has to work according to legal rules.
Environmental factors include steps taken by government to save environment so it will have negative impact on TUI like air flight rationing is proposed by UK governments as a method to reduce pollution, TUI will suffer if government decide to go on with this. On the other hand government is campaigning for greener holiday locations which will also affect.
Tourism industry is one of the fastest growing industry that mainly affects by the globalization. This sector is established with the globalization and it provides to meet different cultures. The current global recession is impacting the tourist industry worldwide. The cultural and political relation increasing between countries mainly develop transport and communication. In today's globalized environment people are much more conscious about different travelling activities (Maleviti, Mulugetta and Wehrmeyer, 2012).
The increasing interest of people to new countries was facilitating the way to reach new countries. It also produces the inequality of incomes between countries. TUI needs to increase their quality of service in order to attract number of customers. Due to high impact of the globalization they can implement green practices like pollution prevention such as waste discharge into waterways, energy consumption and recycling. With the increasing interdependence between countries, economic and people different size firms are involved in the globalization (Kusluvan, 2003).
According to WTO international tourism generated to 880 million in 2009. The increasing globalization in the economic industry creates more tourism market and provide reliable and convenient services for tourists. It will increase the quantity of tourist and with its increasing level companies will need to learn different management approaches to survive and develop in environmental circumstances with the high level of uncertainty as well as implications of future impacts. Tourism industry has evolved over the years and its structure has become more complex with respect to several factors such as ownership, management etc. TUI needs to independently owned and operate their properties (Huntley and Reid, 2002). They needs to set their global booking system and also use standardized technologies in transport system.
Tourism has been lacking competitiveness and it is mainly depends of the government induced constraints. The features of the economy clearly influence the management process of the company as well as several decision making and function capability. It is much more essential to ensure the responsibilities and competencies. The poor management of the company have been clearly determined by the tourism privatization (Gjerald and Øgaard, 2010). The currencies of the world move up and down and it directly affects the cost of travel for million of people.
The economic factor of the hospitality and tourism industry depends on the currency fluctuation also. When the dollar is down against the given currency travelers get less fair for their money. It will lead to decrease the potential to customers about the company and their economic factors. Currency value were always taken into consideration at the time when international destination launch marketing campaign in foreign markets. Another major factor that influence the TUI's economic factor is tax revenues (Briassoulis and Straaten, 2000). It is needed by nations to raise the standard of living of their citizens. The economic development of the country affected by the unemployment, government policy, income level, population and various other economic activities. Governments try to updating their policies as per their norms and sometimes it has its negative impact on the industry of the hospitality and tourism. TUI needs to increase their employment rate and they should educate their employees in order to attain their target. They needs to analyze the current economic condition and plan according to them (Chon and Yu, 2012).
The tourism economy has continue to deliver a direct contribution towards the UK economy. Economic growth of the country depends on different factors and policies owned by government. In the growth of disposable income the total economy of BRIC have been influenced. More amount of money is left for the investment and individuals can use it anywhere. It mainly depends on the growth of income (Bharwani and Butt, 2012). The annual disposable growth of the Europe's market is expected to grow by the growth rate 3.1% annually. It will lead to increase living standard of the customers and they will expected more from the market. TUI has to do necessary changes in the infrastructure and technology as well for their economic growth.
In today's globalized environment the global financial crisis have its major impact on the developing countries. It will be lead towards the international monetary fund and having downgraded its growth forecasts for the year of 2009. The financial influence of the company highly impact the tourist demand. The various terrorist attracts and currency change policies are the major reason behind these crises. After the Bali bombing of the 2002 the arrival of foreign dropped by the significant number and it affects the tourism demand more negatively than the severity of those demands. One of the most important task of any industry depends on the demands of their customers. Each and every company needs to fulfill the requirement of all their customers. TUI can expand its chain by integrating more services like increasing travel agents, increasing range of hotels.
Technology has an instrumental role to play in attaining economic growth by harvesting economic means for customers to travel. The development as well as contribution of air travel is a crucial contribution of technology to this industry. The considerable advancement of low cost carriers is another means of effective application of technology to the tourism industry. The TUI Company has recorded 18 percent of travel sale online in the year 2009. The advancement in information and technology as well as internet has immensely impacted the way in which travel and tourism intermediaries conduct their operations (Reisinger and Dimanche, 2010). The creation of vertical portals has redefined the travel business. This has resulted in creation of many last minute internet based travel portals which efficiently distribute and organize distressed tourism inventories to the customers. Tourism suppliers such as TUI have begun applying ecommerce applications and hence enabling their clients to directly make reservations. The Internet has also rendered it plausible to access premium quality information within a short span of time. In addition to this, it has also made the fulfillment of service expectations possible because customers expect 24*7 services (Tzortzaki and Mihiotis, 2012).
The country's population comprises of people belonging to groups of different age, gender, qualification and employment. It is the nature of population across world that determines growth in tourism and hospitality sector (Zainal and et.al, 2012). Henceforth, the change in demographic trends has huge impact on growth achieved by tourism and hospitality industry in long term The manner in which changing demographic trends effects growth in tourism and hospitality sector is described below.
Age group: The population if comprises of more of youngsters and teenagers the tourism industry tends to achieve high growth. This is due to desire of the group of people to travel to new places and involve in various adventurous activities. These group of people whether earning or not desire to spent money on travelling to new places (Lewis, 2014). Henceforth, presence of more of the young people results in high growth for the industry.
Working Population: In order to plan recreational activities for families and friends; it is necessary to have sufficient disposable income. Therefore, individuals with good living standard and adequate levels of income lead to high growth for the sector. It is necessary for the country to provide sufficient employment opportunities to its citizens (Webster, 2000). Moreover, working population also strives to take time for certain recreational activities so as to reduce their stress levels. The countries with high working population tend to have developed tourism sector.
It is seen that growth in tourism and hospitality sector depends on availability of leisure time and disposable income with people around the economy. Henceforth, nature of population has an huge impact on growth in tourism industry. It is with change in demographics of the population within an economy that growth in tourism sector is affected (Singh, 2008). As an illustration, at times of economic recession tourism sector had seen huge down turn. This is due to more of unemployment and unavailability of sufficient income for spending. It is seen that tourism sector is highly dependent on consumer's level of income and their preference to spent leisure time. Therefore, industry grows with improving living standard of people around the world and vice versa (Poser, 2008).
The change in social factors also plays an important role in deciding growth in tourism and hospitality industry within an economy. These trends comprises of factors such as population and ageing, urbanization, changing social structures, health, aspirations and expectations, values and lifestyles and changing work pattern (Nickson, 2013). The influence or impact that tourism and hospital sector has due to changing social trends is described in brief below:
Unavailability of leisure time: In modern era when everyone is busy with achieving individual growth and managing their work life. It is difficult to take out the time for leisure and recreational activities (Tzortzaki and Mihiotis, 2012). Unavailability of sufficient time has impacted tourism sector negatively in recent past.
Individualism: The consumers are becoming more rational in present world; that in turn leads to increase in demand of customized products and services. Development of novel and innovative products or services makes tourist flexible to accept change (Prideaux, Moscardo and Laws, 2006). This in turn increases competition within industry and affects growth in tourism sector.
Value for money: Every consumer or tourist plans to get benefit of each single penny spent by them. Tourists or consumers want to get return for amount spent in monetary terms. Henceforth, it is the duty of service provider to deliver services that provides deep satisfaction and are considered to be of worth in relation to their spending (Moreno, 2005).
Security and safety issues: The tourism sector has seen negative growth due to increasing number of attacks at tourists place. Consumers demand high degree of safety and security of their life; this in turn affects growth in tourism sector. In order to promote tourism growth the government of respective countries have taken measures to ensure the safety of tourists approaching the place (Gyr, 2010).
Social and environmental concern: In modern era there is an increasing awareness among tourists of country's political, social and environmental conditions. This in turn also affects tourist preference for selection of preferable destination (Komppula, 2009).
Demand for services: There is an increasing demand of services associated with travel packages. Tourists now-a-days demand highly customized services during their travel and stay at various hotels (Reisinger and Dimanche, 2010). Henceforth, the business units should ensure satisfaction of consumer's demand for services offered by them.
Tourism is the sector that is growing at rapid pace in present scenario; making it one of the prominent industries that has significant potential for growth and development. The growth in tourism industry also impact development of economy at whole. Growth in hospitality and tourism industry helps in infrastructure development across the country (Patil, 2013). In order to provide complete understanding of the manner in which growth in tourism sector assists economic growth; the various areas of development are discussed underneath.
Development of proper road networks: In order to create positive brand image of country's in minds of tourists; the government of respective countries tend to develop proper and adequate roads for travelling. As an illustration, at times of organizing games such as common wealth games, Olympics and so on. The host country incurs high expenditure on development and renovation of roads and other infrastructure (Randle, 2013). Henceforth, majority of countries strive to develop roads so as to please tourists visiting from foreign destination.
Establishment of more of international airports: In order to provide easy transportation facilities; the countries tend to establish new airports connecting to foreign destinations. The move is to encourage foreign visits within the country. Development of more of international airports help in reaching preferred destination directly within specified time frame (Singh and Munjal, 2012).
Protection and renovation of historical monuments: The country's government also ensures proper care of historical monuments. In order top preserve the beauty and architect of same various renovation activities are carried (Peters, 2012). The maintenance of historical monuments help in providing foreign visitors a brief idea of country's history and culture.
Overall infrastructure development: In order to promote tourism the country's government carries out various activities for improvement and development of infrastructure. The development activities are carried to attract more of foreign visitors within the country (Lane, 2007). The move by country's government results in improving overall country's infrastructure.
The growth in tourism industry also results in improving transportation system within an economy. It is always an attempt of country's government to provide sound transportation facilities to all the tourists visiting the place (Kusluvan, 2003). The country's tend to develop new network of roads and railways in order to make domestic travelling simple. Moreover, the government emphasizes on development of metros so as to support tourist for travelling within the city. The transportation system within an economy is improved in order to improve tourism sector across the country (Hemmington and King, 2000).
It is seen that main mode of transportation that promotes foreign tourism is airways; the improvement in which results in increasing number of foreign tourists. The country always strives to provide appropriate transportation system within and outside the economy (Gjerald and Øgaard, 2010). In order to promote tourism more of the road and railways network are developed. In addition, establishment of international and domestic airports encourages tourist visit to the specific place. The growth in transportation industry leads to growth in tourism and hospitality industry within the country (Gray, Matear and Matheson, 2000). The developed transportation structure helps in attracting tourists from various parts of world. The visitors to foreign places demand sight seeing and travelling to nearby places so as to have soothing and pleasant experience. Effective travelling within the country is possible only though established and developed transportation.Therefore, the government always try to set apart a proportion of budget on infrastructure and transportation development within an economy (Bharwani and Butt, 2012). This in turn leads to increase in number of foreign visitors and travelers to the specific destination.
Henceforth, one can say with proper development of infrastructure and transportation system. The number of foreign and domestic tourists visiting the place are increasing on continuous basis. This is due to availability of additional facilities that more of tourists are attracted to similar destination (Chen, Sloan and Legrand, 2010).
The tourism industry of the UK has been very mindful of the requirement for sustainability since 1990s when a set of seven guiding principles for balanced tourism development was created by Government’s Tourism and Environment Taskforce. Apart from this, the British Tourist Authority has, from its very inception, included the need of increasing seasonal and regional spread of tourism into its choice of markets for promotional campaigns (Randle, 2013). There are considerable indirect impacts of the tourism economy by its interaction with other businesses in the supply chain. The indirect and direct impact of tourism economy was equal to nearly £127bn of the projected GDP in the year 2013. Such indirect impacts emerge because output and activity in the tourism economy develop and support jobs as well as growth in the broader economic sense as industries sell to and purchase from the visitor country. As a consequence, there are added impacts via interactions with suppliers who supply money to the tourism sector (Randle, 2013).
The national government of the United Kingdom has been developing various initiatives for promoting tourism in the country impressed by the growth of the sector in the last three decades. The country already has highly advanced infrastructure and technology to support the industry. This has been further supported by the number of tourists coming to the nation every year. Immense revenue has been collected by the Tourism Board of United Kingdom from the tourism related activities in the last 30 years. Both local and national governments are keen on maintaining and improving the performance of this sector so that there is continuous circulation of money (Zainal and et.al, 2012). Growth in tourism industry has also resulted in creation of jobs and has had many multiplier effects. The contribution made is enormous and therefore the government is highly supportive of this sector.
Tourism has had a very visible impact on global environment. Tourism has lead to growth of natural disasters like flood, earthquake, volcanoes, drought and another problem like climate change has affected the environment very badly (Singh, 2008). Tourism development certainly puts pressure on natural resources when their consumption is increased in places where such resources are in short supply (Singh and Munjal, 2012). Tourism industry affects the water quality due to construction as well as maintenance of recreational boating, tourist infrastructure and many activities of the cruise liners. Majority of the air pollution related to tourism is because of automobiles. Noise pollution from buses, cars, airplanes and recreational vehicles like jet skis and snow mobiles is a growing problem posed by the tourism industry (Poser, 2008).
Wildlife is getting adversely impacted by the construction of tourist infrastructure and tourism related activities. Such impacts can be direct in form of developments in lower elevations of mountains confinethe migratory range of some wild animals, or indirect like when turtles get disoriented by resort illumination and automobile headlights (Moreno, 2005). Recreational cruise liners and boats are destructing aquatic vegetation by damaging them with their propellers. Wetlands have been damaged for building tourist related infrastructure like roads, airports etc. Hospitality industry in order to expand its network perform several activities like construction of general infrastructure such as roads and airports, and of tourism facilities, including resorts, hotels, restaurants, shops, golf courses this affects the environment adversely (Mehmetoglu and Normann, 2013).
Tourism is one of the fastest growing sectors in present times. It has become a highly important source of wealth, income and employment in several nations and its rapid expansion has been regarded as a fascinating possibility for sustainable development in emerging nations. Although considered as a smokeless industry, the reliance of this sector on natural resources renders any negative impact more noticeable (Maximiliano, Korstanje and George, 2012). Tourism can be made sustainable only if the natural assets are safeguarded from degradation. This is especially true for Africa, which is frequently marketed as a wildlife, nature, cultural heritage and resort destination (Ladeiras, Mota and Costa, 2010). The country has developed a well-managed tourism sector for protecting its natural resources in novel developments and alleviates adverse impacts on natural surroundings from earlier developments. Substantial progress can be seen in nation’s understanding of the implications of the pollution and degradation of nature based assets. The country has incorporated various improvement policies and physical planning for management of such assets (Korstanje and George, 2012).
Moving on the same lines, numerous tourism projects and initiatives have been carried out by the local governments in Latin America and Caribbean Islands. Many preservation activities have been undertaken which include projects inclined towards the preservation of social life, traditions, culture and nature. In addition to this, places with scanty water supply such as Dubai have developed many responses for meeting the ever growing demand of for water (Chen, Sloan and Legrand, 2010). Some of these responses are concentrated on how to recompense for the natural variability in the hydrological cycle for providing a consistently available resource. The country is managing the growing demand of water with demand management practices. To meet these increasing demands, water resource management professionals of the country are enhancing the inadequate water supply with water reuse, desalination, inter basin transfers and augmented groundwater recharge (Gjerald and Øgaard, 2010). Environmental flows are also being increasingly used to preserve eco-systems and increasing availability of water resources.
Many programs can be launched by hotels and tourism organizations such as green hospitality whose main aim is to go green. With support from tourists, local services and producers can compete with larger, foreign companies and local families can support themselves. Whether know as nature tourism or green tourism, education and recreation travel based on natural attractions is an assuring way of advancing environmental, economic and social objectives. Nonetheless, making green tourism a positive environmental and economic tool demands policies which strengthen responsible natural tourism development and also active participation at local level. Cultural preservation is also attained through green tourism and it can be a significant draw for tourists throughout the world. Eco-tourism holidays entail people choosing for a complete green experience (Prideaux, Moscardo and Laws, 2006). This area of sustainable infrastructure development which deals with the affect on environment is attracting many investments. The industry has a favorable response to tourism offers which can reflect “green” credentials and environmental tourism, in its own right is a mushrooming sector. An environmental review will help point out where water and energy is being used and where it is being wasted and subsequently measures can be taken to mitigate such costs and divert superfluous water or energy into practicable usage like creating water features or powering external lighting (Singh, 2008).
From the above case it can be concluded that what important role does tourism and hospitality industry play in a particular country. With the help of different tourism industries many options are available to particular person who is planning tour. As many alternatives are available at cheaper rates. Person sitting at home can plan his vacations and can enjoy in different places. With the increase in modernization these industries are growing rapidly and are adopting new techniques to satisfy their customers’ needs. Main focus is to create brand loyalty by providing best services which would create remarkable experience. So industries try to maintain proper balance between services like travel, food and events etc. company must try to give royal touch to their services in order to exceed expected level of customer.
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