Development of Tourism Industry in the UK - Essay Example

? Development of tourism industry after the world war II Tourism and travel industry in the UK is one of the competitive industries in the world. The industry dwells not in a single activity, but integrates several sectors with the aim of serving needs of the travelers around the world. Since the Second World War, there are a lot of developments. The fundamental factors that have promoted its growth are: Computerized reservation systems: a lot of travelers mainly depended on pen and paper to transact business deals. However, in early 1990s, attitudes changed. Technological advancements captured the attention of the world market. Few people could access facilities and enjoy them to their satisfaction. The data released by the government via the Global Distribution Systems have showed significant growth in the industry. In 1989, the country had recorded 5 million tourists per annum as compared to 29.6 million in 2010 (Holland, 2011). Development in Jet Aircrafts: the development of the jet engine was invented after the Second World War. The advancement brought dramatic changes; although in 1958, the number of travelers per flight was restricted. In early 1970s, jets started ferrying more passengers thus making flight charges low and increasing the profits. This enhanced the growth of the industry significantly during this period. For the last twenty years, the tour operators have developed new packages to accommodate the needs of the new travelers. When compared to early 1950s, tourism has evolved significantly (Holland, 2011). The industry has fully adopted modernization and its structures to enhance its growth. Natural calamities Most countries depend on tourism to earn foreign exchange into the country. However, natural calamities like prolonged drought, tsunamis, earthquakes, floods and hurricanes may gradually change the face of tourism industry. Tourism acts as a source of employment to many people. Some are employed as rangers, tour guides and others in the hospitality sectors. If the number of tourists decline due to natural disasters, people will be affected, and in turn the country becomes broke. Therefore, if tourists don’t come, a lot of pressure will be put on the economy (Smith & ?Ann, 2007). Normally, tourists want to avoid risk places and enjoy themselves in peaceful sites. In general, natural disasters have the following effects: i. Reduced number of tourists visiting the country ii. Low business set ups due to lack of enough money generated in tourism. This will result in closure of business and loss of jobs iii. Increase in rate of unemployment especially in disaster affected areas iv. Increase in government expenditure due to insufficient money generated through taxations. From the above effects, it is clear that natural calamities affect the country’s economic development. Although it is not possible to eliminate them fully, their severity can be reduced. If nothing is done, the growth of the industry may stagnate if not decline in future. This means a lot in the economic trend. Fall in sales volumes Most of the tourist firms in the UK have of late experienced low sales volumes. For instance, Tui Travel, which is one of the companies that provides tourism services, recorded a 35% decline in its sales for the first quarter of the previous financial year (Smith, 2010). This was mainly due to cut in number of tourists traversing the country. Most of the people are more interdependent so they book online which saves them money. Furthermore, most of the people have no plan of spending their holidays far from their homes. This reduces the volume of sales of tourist industries. Fall in sales volumes reflects low income in the affected industry, hence affecting its employees. This also means that the government will not get enough revenue from the same industry. High Cost of vacations Tourists traverse all over the world enjoying their beautiful sceneries and wildlife. In their tour, they spend their time in hotels and other special vacations. Accommodations determine how long they will spend in places. High costs of vacations limit the number of tourists visiting the country. In some hospitality companies in UK, they record a significant small number of tourists. Although they provide special facilities, their costs do not favor all tourists. They are classical and notoriously expensive. There should be a balance between the vacation costs and the number of tourists without compromising any quality (Upham, 2009). The cost of living has been on the rise of late with the tourism industry recording significant effects. When vacation facilities rise too high, the number of tourists significantly reduces. This will reduce the revenue and tax which could be levied on them. This slows the economic growth of the country. If such trend persists, tourists will prefer on some vacations and neglect others. This will bring economic imbalance thus affecting the overall country’s development (Oliver, 2008). Infrastructure According to Upham (2009) and (Oliver, 2008), economic status of the country determines the quality of infrastructure facilities. Most of the tourist resorts in the UK lack well established road networks. Although most known resorts have been developed, there are others which have not been attended. Game parks, for instance should be fed with an all-round roads that enable the tourists to move around. Gaining access to all resorts will attract more tourists to tour the sites. Poor infrastructure hinders the country’s development. Unless the country realizes the value of good infrastructure, there is no development. UK, being one of the developed states, should upgrade its infrastructure to increase its revenue. This will secure it a home of tourists in future. Poaching Animal destruction has been a challenge in tourism industry in UK. People kill wild animals for meat and trading. Elephants, for instance, have been a target for most of the local people. People kill them for its precious gift; ivory. According to the statistics, the number of elephants has greatly reduced for the last ten years. Critically, people poach due to their poor economic status and greed for money. The economic status of the community affects the tourism. When people kill wild animals, simply for their personal gain, the industry has no wildlife for tourist. Wild animals are a source of pride in tourism industry. A bright future should safeguard these resources. Poaching should therefore be stopped for the industry to grow well in future (Holland, 2011). UK economy (GDP) Travel and tourism industry is almost five time the size of any other manufacturing industry. It offers most job opportunities as the financial sector. According to World Travel and Tourism Council (WTTC), tourism industry directly contributes up to ? 35 million UK GDP annually. In 2011, for instance, the industry contributed to GDP of ? 101 billion which was about 7% of the total GDP (Upham, 2009). As compared to other manufacturing industries, mining contributed up to 2% while chemicals 4%. According to the research carried out, it shows that Travel & Tourism GDP contribution is faster than any other sector in UK. The industry is also a stable source of exports for income. In 2011, for example, visitor exports were ?25 billion which was approximately 13% of the service exports and 5 % of the total exports (Oliver, 2008). For the last 20 years, the WTTC has spearheaded both regional and global analysis of the economic effects. This has enabled the industry to grow steadily and provide better services. At the moment, the industry is the biggest employing organization and a fundamental contributor to economic development. In 2012, the country was hosting the Golden Jubilee and the Olympics which boosted the sector to high level. The industry was flooded with tourists from all over the world. They recorded double income at the end of its financial year. The growing concern in the country flourished the industry to attract many people. This boosted other business and related industries like the hospitality. In that year, tourists and travelers enjoyed the flourishing services that had been established (Smith, 2010). With the recent world economic crisis, the industry has not been adversely affected but it has shown a steady growth. Currently, the UK economy is recovering from a depression which arose from the 2007/8 financial crisis but GDP remains 2.5% slightly below the pre-depression peak as of 2013; so far, the UK has experienced a deeper recession than all the G7 apart from Japan. The table below gives the trend of GDP from tourism industry since 2000 (Smith, 2010). Year Gross domestic product 2000 953,576 2005 1,209,334 2006 1,412.189 2007 1,648,090 2009 1,570,178 2011 2,003,281 2012 2,357,195 Inflation and interest rates The UK’s inflation rate recorded a 2.2% in October 2013. Since 1989to date, the inflation rate has averaged 2.8%. The slowdown in the inflation rates is due to price fluctuations in various sectors-transport and education (Holland, 2011). The cost of transport reduced by 0.3% from the previous 1.2% whereas that of education reduced from 21% to 10% (Smith, 2010). The main cause of the decline in transport sector is the prices of oil which affected the market prices. Nevertheless, air fares contributed significantly. This affected the tourist industry. The prices of consumer goods declined from 2.1-1.7% whereas the services annual inflation reduced from 3.5-2.8% in September 2013. This can be shown in the graph below. On the other hand, UK has recorded slow interest rates to its customers. From1980, for instance, the interest rates was 17% and by 2009, it had to 0.5%. This has really attracted business to borrow at low interest rates and establish businesses. The tourist industry has benefited from this. The graph below shows the trend of interest rates in the UK (Upham, 2009). Bank crisis vs. Credit crunch The effects of the Eurozone crisis left most of the UK banks helpless to raise funds required to facilitate business activities, evoking the spectrum of the crunch which followed the downfall of Lehman Brothers. On a serious note, lenders are facing stiff challenges because of high cost of insuring banks against bust. Due to the crisis, banks, households and companies are subject to a period of uncertainty in future, which may include recession (Oliver, 2008). In essence, there is a possibility of weakness in future. The banks can loan companies and the local citizens if there is enough funding in the global market. Employment levels Tourist industry is the main employer of most people in UK. Most people are employed as rangers, tour guides and various department .the unemployment rates have been on the decline for the last couple of months. Poor employment rates increases demand for other needs which are not satisfied. Low unemployment rates means the country has a bigger labour force in work. This implies that there is high economic development due to low dependence ratio. The graph below show the trend of unemployment rates in UK for from 2011 to date (Oliver, 2008). Exchange Rates The table below shows the exchange rates in the market. Tourists come from all over the world and exchange their currencies. For instance, for every sterling pound a tourist from Europe will exchange with 0.835 (1/1.1975) in UK (Smith & ?Ann, 2007). The lower the exchange rates, the higher the inbound tourists because of high exchange rates. On the other hand, increase in inbound tourists increases the inflow of foreign currency. This will enhance other developments and growth of industries. GBP-EUR 1.1975 Pounds to Euros GBP-USD 1.6189 Pounds to Dollars GBP-NZD 1.9899 Pounds to New Zealand Dollars GBP-AUD 1.7679 Pounds to Australian Dollars GBP-CAD 1.7062 Pounds to Canadian Dollars GBP-JPY 163.69 Pounds to Yen GBP-ZAR 16.337 Pounds to South African Rands GBP-AED 5.9415 Pounds to Dirham GBP-INR 101.79 Pounds to Rupees GBP-TRY 3.2573 Pounds to Lira GBP-CHF 1.473 Pounds to Swiss Francs Conclusion UK has done more good than harm in the tourism sector. Although it is facing some challenges like infrastructure and high vacation costs, it has invested most in this sector more than any other. The income from the industry is incomparable. The joblessness rate has greatly declined with many people absorbed in the industry (Holland, 2011). The current market statistics may favor the industry having survived the Eurozone financial crisis. Should such a trend continue, then the tourism industry will experience a steady growth. Reference list Holland, K., 2011. Tourism. Chicago: Malaysia. Oliver, ?., 2008. BTEC National Travel and Tourism. Sydney: Macmillan. Smith, J., 2010. Travel & Tourism. NY: Cambridge University Press. Smith, J.D. & ?Ann, R., 2007. GCE AS Travel and Tourism Single Award for OCR. London: Cengage. Upham, ?., 2009. Climate Change and Aviation. Issues, Challenges and Solutions, II, pp.45-76. Read More