Can Tourism Be Sustainable in the 21st Century - Case Study Example

Tourism Sustainability Tourism is a dynamic industry and in a constant of change. Can this industry remain relevant in the new millennium andaddress the needs of a changing global market? Can tourism be sustainable in the twenty-first century? Will this industry evolve to meet important challenges and changes in the 21st century? Seeking to address these questions and many more with respect to the global tourism industry, this analysis will explore the airline sector, as an important engine of the tourist trade, and the changes that it is facing in the new millennium. Following this, we will explore the country of Oman and analyze the changes that it is undertaking to reinvent itself as a global player in the international tourist market. This case study will analyze the important concerns facing an emerging tourist market which grapples with the challenges associated with selling itself in the 21st century. Airline Challenges in the 21st century Airlines are an important sub-sector of this industry and play an essential role in the global tourist market. Airlines allow people to travel from one end of the planet to the author and the commercialization of flight and the expansion of the airline industry has been a boom for the international tourist trade. Airlines have rejuvenated the tourism industry and contributed to the globalization of the tourist trade. Without airlines this industry were be remarkably different and would not be the lucrative global industry that it has now become. Airlines give us unparalleled choice in the vacations we choose and commercial flight operators are the backbone of the dynamic tourist trade. The important role played by airlines in the worldwide promotion of global tourism has come under threat recently by global events and circumstances beyond the control of the airline industry. Plane hijackings on the morning of September 11th 2001 dealt a severe blow to airline industry as a whole, but particular airlines, including American and United, two airlines which had their planes hijacked that fateful morning, suffered substantially following the horrendous attacks. In fact, following 9/11 there was talk that both airlines would go under and fold because people simply refused to fly on American or United planes. The events which took place that fateful morning were obviously beyond the control of those two airlines but the repercussions were industry-wide and some argue that more than seven years later, the industry has never really fully recovered. In addition to terrorism and its unintended effects, the almost daily fluctuation in the price of oil has been irritating to some, infuriating to others and downright deadly to some segments of the global economy. Some industries, including the airline industry, are particularly susceptible to global fluctuations in the price of oil and have faced numerous challenges in the age of high oil prices. Transportation relies on oil and oil remains the literal fuel of the airline industry. As a sub-sector of the global tourist market, how has the airline industry responded to the trend of unpredictable oil prices? In addition to asking what has been done to date, we ask how can the airline industry look to the future and deal with the future unpredictability of the oil price of oil? What can be accomplished in the short term (12 months) and in the medium-range term of 5 years? Are there steps that the industry can take to ensure that it can cope with the erratic price of oil? How can the tourism industry remain sustainable in the 21st century? Seeking to be descriptive and by offering solutions in a prescriptive manner, this research paper seeks to address the questions surrounding rising oil prices and the airline industry. Data will be compiled from the past two years and analyzed with an eye to how the airline industry can respond to this important threat to its very existence (Douganis 2002, p. 44; Jenkins 1998, p. 22-34). Rising oil prices have challenged the viability of the airline industry as the price of oil has gone up and up and up. Although not as high as it has been in recent memory, Bloomberg Media reports that the price of a barrel of crude oil today (November 29th 2008) sells for approximately $55 a barrel (Bloomberg 2008). At the height of the crisis speculation ran rife that the price of oil would one day reach $200 a barrel. Fuel costs now account for 40% of all airline expenses and “according to an industry analyst, a 3 percent daily rise in oil prices is enough to wipeout an entire years profit” (Seany 2008, p. 3). How has the industry responded to the challenges posed by unrelenting hikes in the price of oil? Airlines have employed a multiplicity of tactics to deal with the rising and unpredictable costs of doing business. During a recent frenzied period in which analysts predicted the price of a barrel of oil to rise to $200 within the next twenty years, Southwest Airlines CEO Gary Kelly took an abstract figure and stated, "No airline can make money at $123 a barrel." (Seany 2008, p. 3). The rising cost of oil has meant fare increases, fewer airlines as some have and will cease to be commercially viable and will be forced to close their doors, fewer available seats and fewer discounts. Yes, the $49 return flight to Miami Beach in February may very well become a thing of the past. Canadian airlines like Air Canada and low-cost carrier Westjet have begun tacking on an unpopular fuel surcharge to their flights, passing on the rising cost of fuel directly to the consumer. In Canada, the fuel surcharge was implemented in 2005, after a period in which the price of oil jumped an incredible 50% in a one year period in the Canadian market (CTV 2005). The rising cost of oil is a global concern with international ramifications for sub-sectors of the tourist industry. The following will explore how a developing tourist market, Oman, has prepared for the challenges of the 21st century. Oman Oman is committed to developing its tourism industry and capitalizing on renewed global interest in the Middle East. Having experienced tremendous economic growth for more than thirty five years, Oman continues to attract seasoned travelers from all corners of the globe and has become an exclusive luxury hotspot. Since the ascension of Sultan Qaboos to the throne in 1970, Oman has embraced foreign capital, foreign investment and tourism. A developmental boom laid the ground work for strong investment in the tourism sector and the central government in Muscat has provided extensive support nurturing this important segment of the Omani economy. Development in Oman has been propelled by governmental support and thus has led to tremendous growth in both the tourism and real estate markets. Oman is now a sports and business hub and as a new exclusive vacation hotspot, this country is poised to become one of the world’s leaders in luxury travel. According to a revealing report by the World Tourism and Travel Council (WTTC), Oman has the fastest growing tourism and travel economy in the world, generating more than 5.4 million USD in economic activity in 2007. Tourism contributes approximately 2.2% of the Omani GDP and this share is expected to rise by more than 40% to 3.2% by 2017. Employment in the industry currently accounts for 10.1% of total employment in the country or 1 in every 9.9 jobs. Global travel and tourism spending exceeded $7 trillion USD, employing about 231 million people and generating more than 10.4 per cent of total world GDP. Accordingly, global travel and tourism spending is expected to exceed $13 trillion USD within the next ten years (Oman Air 2008). The Sultanate of Oman is increasingly becoming a player on the international stage and opening up to the world has been a foreign policy goal for decades. A focus on the tourism and the hospitality sector is just one of the ways in which Oman has opened itself up to the international community and the rest of the world. According to the WTTC, Oman has the fastest growing tourism and travel economy in the world, generating last year more than $5.4 million USD in economic activity. Expectations for future growth are estimated to be $7.9 million USD by 2017 (Ministry of Information, Sultanate of Oman 2008; Oman Air 2008). Concluding Remarks Tourism is a dynamic industry and is evolving in a new millennium. The airline industry represents a dynamic sub-sector of the global tourist trade which has had to face significant challenges in the 21st century. Due to its dependence on oil and the inherent instability of global oil markets over the past few years, the airline industry must devise certain concrete steps to deal with fluctuating oil prices and unstable markets in order to remain a viable business option. Additionally, this essay has shown that Oman has become an exclusive tourist destination for travelers from all over the world and growth in this industry continues to grow at a record pace. Seeking to understand the important implications of change in a new millennium on the sustainability of the international tourist trade, this analysis has explored how both the global airline industry and the emerging tourist market of Oman have responded to challenges in 21st century. REFERENCES Doganis, R. 2002, Flying Off Course: The Economics of International Airlines, Routledge, London. Jenkins, G. 1998, Derivatives Trading by Oil Companies and Airlines: A Survey of the 1997 and 1998 Annual Reports with Critical Commentary, Sunningdale Publications, New York. Ministry of Information, Sultanate of Oman 2008. Economic Development. Muscat, Oman, viewed February 28 2009, . “Oil scales new record above $115”, April 16 2008, British Broadcasting Corporation (BBC.com), Accessed February 23, 2009, http://news.bbc.co.uk/2/hi/business/7349852.stm Oman Air 2008. Oman Air, An Important Strategic Partner Promoting Tourism. Muscat, Oman, viewed February 28 2009, Seaney, R, May 14, 2008, “Disaster for Airlines: Oil Prices”. ABC News.com, May 14, 2008, Accessed November 29, 2008 http://abcnews.go.com/Business/BusinessTravel/Story?id=4847008&page=1 “World Oil Prices” WTRG Economics, Accessed February 23, 2009, http://www.wtrg.com/prices.htm Read More