Changes in the Travel and Tourism Market - Assignment Example

?PORTFOLIO Investigate the change of one market: product or service over the last 5 years. You are expected to analyse how Economic and Technological factors contribute to these changes [eg sport clothes, butter, travelling, and delivery]. Travel and tourism is a major industry worldwide and contributes immensely to both, the local economy and global economy has a whole. The last five years has been roller coaster ride in travel and tourism markets. The pendulum has consistently swung both ways with respect to boom and decline in the tourism trends worldwide. The trends are very indifferent when compared to different parts of the world. It is a market that is very important for any economy and is capable of creating more jobs per million currency investments than any other market or industry. This report will investigate the various changes in the travel and tourism market in the last five years (2007-2011) and analyse how economic and technological factors have contributed to these changes. Tourism industry continued its strong growth in 2007 like the previous 3 years. 2008 started on a positive note with a 5% increase in the first half but started to decline as the graph of the number of international arrivals started moving in the negative curve. The year ended with an overall growth of only 2% in complete contrast to the 7% growth in 2007 (UNWTO, 2009). The trend continued as there as a 4.2% decline in 2009. Tourism and travel industry hit an all time low in 2009 (UNWTO, 2010). 2010 saw exceptional recovery with a 7% increase in the number of international tourist arrivals (935 million). Even though there was a speedy recovery, it was not consistent and was at varied speeds. It was the emerging economies that mainly contributed to the recover. The recovery was lower in the advanced economies and this reflected the global economic situation at the time (UNWTO, 2011). But an exception to this is the US. 2010 saw a record-setting 60 million international tourist (Office of Travel and Tourism Industries, 2010). International tourism consolidated for the losses and saw tremendous recovery. 2011 was a great year as there was healthy growth registered. There was 5% increase in international tourism in first half of 2011 this in spite of many challenges. The fact that has been very promising is that the advanced economies have grown faster than expected. The number of international arrivals was a record 440 million. European countries have done exceedingly well with strong growth even though the economic situation has been very gloomy. During the same time, as international tourism has been swinging both ways, domestic tourism saw a steady growth in majority of the markets. Source: UNWTO, IMaCS analysis There were also other important changes in the travel and tourism industry in the last five years. Internet was heavily used by users to assist in the travel plans. Following are some of the important statistics with respect to travel and technology: Search engines were used for gathering travelling information by 62% of personal travellers (Trent, 2011) Mobile devices were extensively used by business travellers (51%) (Trent, 2011) Flash sales have become very popular in the travel and tourism industry. Unexpected emails have resulted in a 25% booking of travel services (Trent, 2011) Online booking of travel destinations and services has increases tremendously (Trent, 2011). Economic factors have been a major contributor to the changes in the travel and tourism industry in the last five years. The global economic crisis has been the contributor to the decline in the growth of the travel and tourism industry in the 2008 and 2009. The various economic factors that lead to the downfall of the travel and tourism industry were the global financial crisis, fluctuations in exchange rate (massive fluctuations), credit crunch, increase in the prices of the commodities and oil prices. The consumers as well as the business had lost their confidence in the economic conditions. This affected the spending behaviours of the customers. People were more worried towards making a living and concentrated on saving money. They either completely cut-off their travel plans or choose less expensive domestic locations for travelling. Corporations also cut down on their travel plans. Corporate meetings and incentive travel took backseat and this affected tourism industry negatively. Consumers and corporations who can afford international travel are looking at cheaper options and also booking early. Hotels and Air travel have been mainly affected by the economic situations of 2008 and 2009. As the economic conditions improved in 2010 and 2010, so did the travel trends. People were again ready to spend and this was evident in the numbers. Another factor to the noted here is that it was the advanced countries that were mainly affected by the economic crisis. Hence, emerging economies were the first to recover from the slump due to the crisis. Also, travellers choose emerging economies as their destinations as they were cheaper compared to the advanced economies. Hence, economic factors have mainly affected the changes that were seen in the travel and tourism industry in the last 5 years. Technological factors Technological factors have also contributed to the changes in the travel and tourism industry. Mainly, internet has had the greatest effect on how the travel and tourism operates. Internet has made a wealth of information available to prospective tourists to research on the destinations that they want to choose. It has also provided a platform for effective marketing of tourist destinations. This has to be one of the main factors that the global travel and tourism has seen the boom that it has in the last decade (irrespective of the decline due to economic crisis). Secure online payments have helped in booking of tickets and other travel related activities (like safari, adventure activities). With respect to corporations, electronic data exchange and teleconferencing technologies have been it possible for corporations to have meeting online. This has not just reduced the expenses of travelling but also have proven to be every effective with group meetings across boundaries. This has negatively affected the travel and tourism industry. 2. Analyse the opportunities or risks faced by an export/import oriented industry with reference to international trade, investment and appropriate PESTL factors. The industry should normally be either a manufacturing or service, for example, car or airline. The automobile industry has been one of the main drivers of the world economy. It is one of the major industrial sectors with respect to innovation, technology, global market share, revenue and design. The global automobile industry is growing at a great pace. This report analyses the various opportunities or risks the automobile industry faces with reference to international trade, investment and appropriate PESTL factors. International Trade There is great scope in the automobile industry for international trade. Automobile industry is now a global phenomenon. Globalization and liberalization have opened up new markets for big companies from all parts of the world. Foreign direct investments, partnerships, alliances, mergers have opened up new ways. Also, emerging economies such as India and China have changed their economic policies to accommodate big companies. Also, companies are looking for new ways to improve their cost efficiencies and try to broaden their supply chain. There is a huge demand for automobile parts that are manufactured in low-cost economies such as China. There is a very big market for import and export of quality automobile parts. Along with the opportunities there are also a few threats. Increasing inflation rates in major countries has lead to the increase in prices of goods and services (also including automobile industry). This has affected the buying power of the customer (Parnell, 2003). Currency exchange rates which are unpredictable and most dramatic are major risk with respect to international trade, mainly while investing (Parnell, 2003). The competition is very high in the automobile industry with new companies entering the market every day. The local companies try to raise the barriers to entry to a market. The competition is very intense. It is not easy for global giants in the industry to enter new markets as local competition is high and have an advantage over multinational companies with respect to supply chain and pricing strategies (Reuvid, 2005). As the competition increases, customers have more options to choose from. Also there can be a decline of prices. There is a decline in per unit profit margins. This means the cost of international trade is high but the profits are the same. Importing products and then marketing in local market is very risky. The cost of import is very high and this price cannot be transferred to the end user in such a tight competitive industry. The taxes on imported goods are very high. So this pushes the companies to have a supply chain in the local market as this is helps them to effectively compete with local companies. Economical Factors The global economic crisis can be a major worry to the automobile industry. Consumers spending behaviour has been drastically altered due to gloomy economic situation. One of the major threats is the stagnation of automobile sales (Reuvid, 2005). As the crisis is expected to worsen in the near future, consumers will be more oriented towards savings rather than spending. Not just the consumers but also companies are rethinking their expansion strategies. The economic situation has forced the companies to think of low cost strategies and products. Rise in inflation along with exchange rate fluctuations has also contributed to this. This has made the prices of automobile parts costly and hence increased the production cost of units. Environmental factors Global warming has caught the attention of the world and there is an increased awareness among people to reduce it. Automobile industry has been at the receiving end of this. There are pressures from various quarters of the society reduce the use of automobiles as they are the major contributors to the emission of green house gases. Governments are taking initiatives to improve public transport systems worldwide with the goal to increase the use of mass transportation. Other efforts have been targeted towards production and use of alternate mode transport which runs on renewable sources of energy. This is one of the biggest threat that the automobile industry faces. Along with threat, there is also an opportunity that has comes along. Automobile industry can now focus its research and development towards coming up with automobiles that run on bio fuels and other eco-friendly. This will get the attention and support from all quarters of the society and governments will encourage such technologies to be implemented in their respective countries. Tax exemptions are a possibility with such initiatives which will help the company to break-even. Customers will also be more inclined towards socially responsible companies. Adopting green strategy will also end up being a major marketing booster. Eco-friendly vehicles are the future and hence the market is wide open the automobile industry to make the shift. Technological factors There is great potential in the automobile industry to innovate new products. The technology has developed greatly and has opened up new doors to come up with new innovative products and services. The automobile industry is at a transition phase and the companies that take the leap and use or come up with technologies that are not only cost effective but also environmental friendly have great opportunities. Even though the technology available right now does not allow companies to produce automobiles that run on alternate fuel on a large scale the opportunity exists for companies to explore this. References Parnell, J.A. (2003). Strategic Management: Theory & Practice. OH: Dreamtech Press. Reuvid, (2005). Doing Business with Slovakia. London: GMB Publishing Ltd. Trent (2011). Rich Snippets Get You More Clicks. [Online]. Available at: http://www.blizzardinternet.com/travel-stats/. Accessed on Accessed on 11 January 2012. Office of Travel and Tourism Industries (2010). U.S. Travel and Tourism Industries: A Year in Review. [Online]. Available at: http://tinet.ita.doc.gov/pdf/2010-year-in-review.pdf. Accessed on 11 January 2012. UNWTO (2009). “International Tourism Challenged By Deteriorating Global Economy”. UNWTO World Tourism Barometer. 7(1). Available at: http://www.unwto.org/facts/eng/pdf/barometer/UNWTO_Barom09_1_en.pdf. Accessed on 11 January 2012. UNWTO (2010). “International Tourist Arrival Back At 2008 Pre-Crisis Peak Level”. UNWTO World Tourism Barometer. 8(3). Available at: http://dtxtq4w60xqpw.cloudfront.net/sites/all/files/pdf/unwto_barom10_3_en.pdf. Accessed on 11 January 2012. UNWTO (2011). “Advance Release January 2011”. UNWTO World Tourism Barometer. Available at: http://dtxtq4w60xqpw.cloudfront.net/sites/all/files/pdf/unwto_hq_fitur11_jk_1pp.pdf. Accessed on 11 January 2012. Read More