LO4: The Impacts of change on the travel and tourism sector

4.1 Analyse the impacts of issues and trends that drive change in the travel and tourism sector

4.2 Discuss the likely consequences of businesses failing to respond to market changes

Introduction

The impact of current issues such as terrorist attacks in France, Greece, Eurozone crisis problems will make tourism industry facing new challenges. Terrorist attack in tourism centre such as airports, museum and major attractions may have huge impact on tourism. As a consequences the travel and tourism industry will be facing change in their business areas such as mergers, acquisitions, and liquidations, formation of consortia on business, product and services. These impact also have an effect on business failing to respond to market changes. The consequences of business failure includes the form of financial, social, and psychological costs. Failure can lead to reduce sale and profit, change in customer buying behaviour, and also negative impact on organisation brand image.

This blog will be analysing the issues and trends that drive change in the travel and tourism sector, and it will be also discussing the consequences of businesses failing to respond to market of changes.

The trends could drive change in travel tourism sector are transportation issue, again population, alternative travel experience, meeting business travel needs and potential economic deflation. With the merger of airlines around the world, budget airlines such as Easy Jet and Ryanair continue to carry with low cost services. Both BA and United Airlines suffer from with the budget airlines.  The cost of an airline ticket is now merely an approximation as the ticket only buys the most basic of services and then passenger is asked to pay for additional fees for almost everything else.  However, the cost of airline perhaps encourage customer to travel more and will challenge to the tourism industry than is the lack of comfort.  Aging population change is another trends that can drive change to tourism industry. The travel and tourism industry will continue to see a wide demographic change in the future. The retirement ages will be boom as the new generation groups, and these age groups will have more leisure time and more money to spend. But these ages’ groups tend to deal with stress and are likely to seek alternatives unfair travel difficulties. This type of traveller are who seek economy over comfort and look for adventure rather than luxury travel styles. The growth of this market will be especially important for places offering adventure tourism.

Alternative or niche travel experiences is another trends that could drive change in travel and tourism. New travel experiences will mix business with pleasure, short-term vacations, that hold long weekends. Some of the new and fast growing markets are the religious tourism market, the gastro market, the history seeking market, and the travel and wine market.  The key to niche marketing is to find something unique about a specific community, brand it and publicize to the demographic that may fit into the niche. Hotel and Travel Company should prepare for business traveller. These type of travel will expect more from hotels and transportation companies.  Business travellers around the world expect free internet and Wi-Fi services.    These people need access to free printing via the Internet, flexible check-in and check-out times and dining options that are both affordable and varied.  Many business travellers also travel with family members and seek not only to combine business with pleasure.

There are a number of drivers of change that impact upon the tourism industry, these are including merger or takeover  in which a company buy their target company in order to control  other assets. Company may merger regarding to their diverse economic and political climate, this could be able to reduce risk by merging with firms in other countries. This also benefit of reducing economic recessions and maximize the wealth of the shareholders.  For example, Thomson Travel Company merged with its rival UK travel groups Frist Choice Holiday in order to expand their holiday company in European. TUI travel said that their revenues will be increased in the future and they will expand their holiday destination in 20 countries with more than 200 destinations.  The advantages of merger increase the shares of First Choices and it will be saving product cost £100m a year said that Frist Choice Chief executive. However, the two company merger might put job lost in both company.

Likely consequences of business failing to respond to market change.

The travel and tourism industry business can fail in the market if they could not respond to the change of current trends and issues. Therefore, the business should adapt acquisitions, liquidations, horizontal and vertical merges to survive in the competition world. The consequences of business failing effect on the company sales, it can reduce sales and profitability. It is also has negative impact on brand image for example, if the tourism company cannot compete with current trends or update the company is more like to leave behind. Moreover, it could have negative impact on image of product and service which could cause to liquidation of companies in respond to changes of current issues.  If the company could not apply effective or flexible approaching to change, the business might get behind because of the rapid development of technology for example, BA need to adapt their check in system  and short –haul flight system  when compare with Easy Jet. As the consequence the company progressions will be slow and these will lead to recession or crisis. For example, BA Go budget airlines went for sale after two years of business. BA said that Go airlines did not fitted in the BA strategy and it should go separate ways. Go low cost airlines launched in 1998 with £25 million and flow to 25 destinations. BA’s business is liquidation because they could not respond of change such as technology innovation, lake of customer services and with rising of fuel cost.