Economic for Managers: Australian Tourism Industry - Assignment Example

ECONOMIC FOR MANAGERS: AUSTRALIAN TOURISM INDUSTRY By Student’s Name Code + Course Name Professor’s Name University Cite, State Question 1: Summary The article indicates that the Australian economy has undergone economic growth. The growth is attributed to improved household consumption, exports of goods and services, dwelling investment as well as non-dwelling new building construction. There was also a distinctive depreciation in the level of Australian dollar in comparison to the US dollar to at least $0.82 (Tourism Research Australia, 2015). It is noted that the depreciation in the Australian dollar has acted towards improving Australia’s price competitiveness for international investment, and also has a positive impact on Australian exports that also involve inbound tourists. The current interest rates are now positioned at a low of 2.0 per cent (Tourism Research Australia, 2015). The lowly-placed interest rate is associated with the changes effected to the cash rate by the Reserve Bank of Australia. It is also attributed to the sharp decrease in the level of petrol prices of 50%, which has resulted to intensive household spending as well as returned consumer confidence (Tourism Research Australia, 2015). The article further notes of the outstanding growth in the Australian investment environment in comparison to the overall global development. The Australian economy is one of the global strongest as well as most efficient regulatory environments for business purposes as well as rated amongst the best in regards to business-friendly economies (Tourism Research Australia, 2015). Recent surveys conducted in the Australian tourism sector have experienced substantial levels of improvement in significant investment opportunities as well as in the refurbishment of existing tourism products and services. Consequently, the survey indicates a possibility of the industry going through hurdles that might include; challenges that emanate from exchange rate depreciation, limited skilled labour, adequate number of air mode of transport connections, lack of new tourist attraction sites as well as limited number of accommodation to serve the ever-growing number of both local and international-based visitors. The aforementioned evaluations also indicate that there is optimistic position in relation to the level of aviation infrastructure, accommodation s well as the arts and recreation sectors. In fact, the research survey postulates the fundamental aspect that relates to international and domestic financial facets in emphasising the tourism investment opportunities in the economy (Tourism Research Australia, 2015). In essence, the Australian tourism investment is highly affected by the global financial environment, which is considered to be the most crucial facet for the 12 months followed by immediate access to investment funding. Notwithstanding, the article notes that tourism investment is also affected by the current exchange rates and its direct effect on tourism investment performance structure, which also happens to be the fundamental factor that has continued to improve in its importance each and every year since the start of 2012 (Tourism Research Australia, 2015). The future of Australian tourism sector remains to be attractive for both domestic and foreign-based investors while at the same time a positive outlook in terms of development in the tourism’s overall contribution to both national income and employment opportunities. In fact, the author notes that over the years, the demand for Australian-based tourism services has increased tenfold in relation to global and domestic-based visitations (Tourism Research Australia, 2015). The economic contribution of the sector can be perceived clearly in the improvements made to direct tourism gross domestic products, employment opportunities of up to 534,000 people as well as increase in the degree of overall exports of about 8.2 per cent making it the economy’s greatest services export industry in 2014 (Tourism Research Australia, 2015). It is established that the economy experienced an improvement in the domestic overnight visitations of at least 7.4 per cent, which is attributed to underpinned visitations in relatives and friends. Subsequently, there were improved inbound aviation capabilities with the overall number of international visitations increase by at least 8.4 per cent in 2014. This is attributed to increased visitors from Malaysia and India. On the other hand, there was noted a significant decline in the level of accommodation within the 2013 and 2014 operational period within this sector (Tourism Research Australia, 2015). The majority of the decline is entirely inclined towards most of the regional Australia sections. The article notes that there is an opportunity in the sector especially in the mixed-use development. The investment pipeline has continued to post reliable and positive growth given that it promotes higher-yields, attracts a substantial number of potential buyers from different kind of markets as well as enhances the refurbishment of underlying constructions through the provision of hotel-based services (Tourism Research Australia, 2015). It also has the effect of improving the overall accommodation investment in case direct demand is met. Question 2 The effects or rather the influence of globalisation on the development of tourism for different economies cannot be measured because it entails complex economic processess. In essence, the effect of globalisation might result to distinctive alterations in the overall tourism management (Russo & van der Borg, 2002). There are numerous challenges attributed to increasing global tourism activities that include; intensified level of competition and the immediate outcomes of investment activities of regional areas, the sustainable development and protection of existing cultural resources overdependence on international tourist markets as well as the importance on market information systems and how the operate. The growth in competition especially in matters related to development of new areas and objections to improve on the spent free time become visible due to overindulgence of tourists into the country’s way of life. The imminent accumulation and standard of attractiveness of underlying resources and public-based services develop intensive amounts of profits in other sectors of the overall economy. Subsequently, it also allows firms ample time to formulate on where to put their respective investments as well as on fairly-qualified employees in regards to choosing on where to live and work (Theuns, 2008). Due to competition and globalisation, economies are compelled to engage in robust construction of modern tourist facilities, which act as critical tools needed for increasing the overall tourist attractiveness (Theuns, 2008). In fact, this proves the assumption that increasing investment in the Australian tourism industry is a fundamental economic policy for future sustainability. This rests with the fact that regional cities within a given economy remain focused on improving their tourist offers, avail new opportunities that will ensure the spending of free time to visitors as well residents as a way of enriching tourist attractions (Theuns, 2008). Assuming a macroeconomic perspective, it is established that the future processes that is conducted within the overall tourism industry under the aspect of globalisation assumes more general approach in the distribution of incomes between capital and labor within the overall national economy as well as between labour in the industrialised and non-industrialised countries (Theuns, 2008). Below is a table showing the list of top-most visited city destinations across the globe; Research indicates that cities, especially the bigger and highly placed ones, continue to portray imminent attraction hence become the most-frequent toured areas of the world. The current statistics of the Australian overall developments in establishment of new attraction sites postulate a significant decline over the 2013 and 2014 operational years hence calling for immediate investment opportunities in the areas as a way of ensuring future sustainable development (Theuns, 2008). The Australian tourism stakeholders should understand the fact that globalisation has facilitated the widening of the gap that exists between powerful world tourism cities as well as other urban-based centres. On this note therefore, opting to construct bigger and more distinctive objects will be of no use rather, there should be efforts made to allow distinctiveness (Theuns, 2008). The investment in the Australian smaller cities should be distinct in a way especially in ways that promote innovativeness and creativity. Question 3 Part a) The introduction of special tax on the overall hospitality industry assuming a perfectly competitive market will result to a significant number of alterations. It is stated that introduction of a tax on a given commodity results to a block in relation to the existing prices paid by consumers and the one received by the producers (Merce, 2009). In fact, the price paid by the consumer will tend to rise significantly while the one received by producers will experience a downward trend with the difference between them equalised to the tax per unit. For this case, the overall burden of the tax exercised within the hospitality industry will solely depend on the price elasticity of demand and supply so that the higher the level of the price elasticity of demand, the greater the burden on the existing producers (Foster & Rausser, 1993). On the other hand, the higher the price elasticity of supply results to a greater level of burden on the consumers. Figure 1 The above figure shows the direct effects of the levy’s buyer tax on both the consumer and producer surplus. In the immediate absence of the special tax, the equilibrium is set at position E, while the equilibrium rental prices as well as the demand are at PE and QE respectively. The buyers’ levy tax results to blockage that is equal to the relative amount of the tax present between the price received by the producers and those paid by the consumers, which has the effect of decreasing the demand that is purchased and sold. For this case, where the special tax is assigned at T dollars per each unit of the room offered to the market, the amount of the units purchased and sold at any given moment will fall to QT (Buts & Jegers, 2013). Consequently, the prices that are paid by the customers will increase to position PC while the demand price of the decreased amounts as well as the prices received by the producers will fall to position PP. The imminent difference that arises between prices Pc and PP is the reflection of the buyers levy tax introduced by the government. It is important to understand the fact that a possible price increase will result to a similar loss to customers (Buts & Jegers, 2013). Thus, for the case of the buyers’ levy tax introduction, any increase in the equilibrium rental prices paid by the consumers would cause a loss that is in equal measure to the total surplus as portrayed in the area that is colour blue. Part b) An increase in the buyer’s tax cannot raise social welfare but rather it results to deadweight loss to the society as whole. The loss is attributed to the fact there would less of the hospitality services generated and consumed in comparison to periods where there was absence of the special tax. It is quite crucial to realise that deadweight loss from the special tax emanates out of the fact that it limits mutual beneficial transactions from taking place (Konrad, Morath, & Müller, 2014). In essence, both the producer and consumer surplus that is sacrificed from the transactions will equal the overall size of the deadweight itself. It thus goes without saying that the larger the level of impeded transactions results to higher deadweight loss. Figure 2 below fairly explains the effect of the special tax to social welfare as a whole. Part c) Yes. The increase in the buyers’ levy tax has the capacity to increase the level of federal government’s revenues. In truth, the revenues the federal government is likely to collect will equal to the tax levied per each unit of the accommodation services sold at any given moment. This can be fairly expounded in Figure 1 whereby T is multiplied to the level of amounts sold to portray the increase is revenues collected (Konrad, Morath, & Müller, 2014). The federal government gains substantially from whatever the consumers and producers lose from the application of this special tax. Revenue collected is defined by the rectangle QT wide and T-high in Figure 1. Question 4 Part a) Suppose the tourism industry operates under a perfective competitive market then it means that there are numerous companies that are in competition to hire specific form of labour, there are many qualified personnel that possess almost identical knowledge and skills and, also these firms, on an individual capacity, are considered to be wage-takers given that they do not have the capacity to control over the market wage rates (Konrad, Morath, & Müller, 2014). The new wage rate will be positioned at the position where the company maximises it profitability levels by hiring workers up to a point where MRP=MFC as shown in the Figure 3 below; Part b) In cases whereof enormous union pressure and the government sets the minimum wage above the equilibrium wage, these unions will likely assist to increase demand for the hospitality services their members help to generate hence improve the derived demand for the labour services through such techniques as advertising and political lobbying. There is also a higher level of possibility for increased productivity since decisions affecting personnel will be unilaterally overseen by the management as agreed by union terms. The society at large will benefit from reduced prices since unions support public actions that help eliminate the prices for complementary factors of production. Figure 3 Question 5 The three global tourism leaders are; first, the United States of America, which seen an increase of inbound tourism market to 56 million visitors since 2013 with most of the visitors coming in from Canada and Mexico (European Travel Commission, 2014). The country enjoys a greater level of tourism activities that include family union and international travels. Another global leader is Brazil, which is now experiencing a golden phase with significant improvements in the number of both inbound and exbound tourists flocking the economy for its heritage and beaches attractions. The country enjoys a great number of visitations from Argentina who provide a market participation of 29 per cent (European Travel Commission, 2014). China is yet another global tourism leader that receives thousands of visitors internationally to enjoy their respective heritage sites Australia can help transform its existing tourism market by promoting inbound and exbound tourism expeditions. Such activities as family union and youth sports travels should be emphasised at all costs. Subsequently, the country should ensure to invest in beach resorts as well as promote nature and ecotourism, which in fact is the current mode of tourism activities cross the globe. References List Buts, C, & Jegers, M 2013, 'The Effect Of Subsidies On Consumer's Surplus', Advances in Business-Related Scientific Research Journal, vol. 4, no. 2, pp. 127-138. European Travel Commission 2014. European Tourism 2014-Trends & Prospects. Retrieved on September 4, 2015 from http://www.etc-corporate.org/?page=download-report&report_id=64 Foster, WE, & Rausser, GC 1993, 'Price-distorting compensation serving the consumer and taxpayer interest', Public Choice, vol. 77, no. 2, pp. 275-291. Konrad, KA, Morath, F, & Müller, W 2014, 'Taxation and Market Power', Canadian Journal of Economics, vol. 47, no. 1, pp. 173-202 Merce, CC 2009, 'Competition and Solidarity on Market', [Competitive Si Solidarities Pe Piata], Agricultural Management / Lucrari Stiintifice Seria I, Management Agricol, vol. 11, no. 2, pp. 1-4. Russo, AP & van der Borg, J 2002. Planning considerations for cultural tourism: A case study of four European Cities, Tourism Management, vol.23, no.6: pp.631-637. Tourism Research Australia 2015, Tourism Investment Monitor. Austrade. Print. Theuns, HL. 2008. Globalisation and Tourism: Pros and Cons, Tourism Recreation Research (Lucknow), vol.33, no.1, pp.99-105. Vanhove N 2005. The economics of tourism destinations, Elsevier Butterworth-Heinemann, Oxford. Read More