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Sustainability Analysis Of Uk Company Tui Tourism Essay

Package Holidays as an industry were very badly affected by recession in the year 2009 with the faster and continuous decline in the number of customers interested for international visits. In consideration to the market share, there was a positive rise seen in the independent holidays as broadband diffusion is still growing. Nowadays online booking has become common and also the market leaders in the low cost airline industry have succeeded in increasing the number of passengers irrespective to the airline industry having suffered (Eyefortravel, 2010). The year 2010 has shown a good response and also the market leaders looked in a better position compared to year 2009.

COMPANY PROFILE:

TUI has its head quarters located in the UK. It stands to be the world’s best travel company operating in 180 countries with a customer base of nearly 30 million in 27 key source markets. It employs nearly 49,000 people. Its business is divided into three segments namely: Tourism, Shipping and various other sectors. It provides the customers with a complete package that includes booking in travel agency, flights, accommodation in TUI’s self-owned hotels and also an arrangement of a separate tour guides for customers. It ranks no. 1 among European tour operators whereas no. 5 in container shipping business. It is the only travel company to have been listed on the London Stock Exchange. It entered into a joint venture with Royal Caribbean Cruises in the year 2008 which provided them with a helping hand in the industry (Companies and Markets, 2008).

IDENTIFICATION OF MAIN SUSTAINABLE FEATURES:

TUI plans to guide the sustainable development throughout the leisure industry and also develop this at a larger scale. They have a belief that this aim can help their investors have faith in TUI travel which would help them to expand their business in the near future. TUI travel featured in the Carbon Disclosure Leadership Index for the third consecutive time and was ranked 6th in the FTSE 350 for its initiative to carbon disclosure. For TUI travel Sustainable tourism is an integral part through which it operates. It is obliged to the functions aimed at decreasing the impact that the business would have on the environment and increasing the positive, economic and social effects amongst the destinations. Recently two new employees have been added to the sustainable development team bringing the total number of employees to 23.

2. PESTLE ANALYSIS:

POLITICAL:

Issues like terrorist attacks have targeted the UK. If certain rules in relation to destination are changed then there could be circumstances where the travel insurers could refuse to provide cover to tourists and ultimately tourism would suffer.

Government political instability can be another aspect that would harm the tourism sector of the country. Till date UK had a trustworthy government that focused mainly on “sustainable tourism” concept.

Taxation policies on tourism can also affect the tourism industry. On a good note, the government of UK has provided certain tax exemptions and subsidies in order to promote tourism.

ECONOMIC:

Globalization has given rise to new opportunities. It has contributed towards the growth of tourism. And also variations in oil prices play an important role up to a certain extent.

Exchange rate can also stand to be an important factor for tourism industry as a stable exchange rate can be helpful to promote tourism.

There is a prediction made by UNWTOs tourism vision 2020 that the proportion of international visitors will touch 1.6 billion by 2020 and this will create more opportunities for the tourism industry.

Global recession can possibly result into entry and exit of many players from the industry.

SOCIO-CULTURAL:

Recently there has been a huge increase in the number of consumers who prefer to buy online (Eyefortravel, 2010). From past couple of decades there has been an increase in the jobs performed by women and this has ultimately helped to boost the lifestyle of the women (Office for National Statistics, 2008).

Rapid change has been seen in the attitude of the customers towards the safety and environment issue. One of the study conducted by BCG revealed the fact that “going green” concept is securing more importance.

TECHNOLOGICAL:

Recently a vast development and change has been noticed as far as the technological aspect is concerned. As far as the hospitality sector is concerned, the old fashioned paper billing has been replaced by electronic billing (Nikolis, 2008).

There are chances that the TV and games can stand to create problems for tourism. However Tourism agencies have an option of making use of TV hotlines and customer call centres to maintain the continuous customer relationship.

LEGAL:

The Travel and Tourism industry has been abided by certain restrictions in form of rules and regulations (Direct, 2008). Certain regulations have been imposed by the UK package holiday according to which any tour operator who failed to meet up with the regulations will be charged a liability.

A wide range of regulations are issued by the government in relation to Aviation safety that covers domestic, health as well as consumer issues.

ENVIRONMENTAL:

The issues in relation to environment are increasing day by day. Pollution from petrol fumes e.g. motor boats, jet skis, etc. Tourists have also put a burden on resources like water. E.g. places where the golf courses are situated. The government is getting more and more concerned about such issues. The UK government is making a decision to introduce Ration Air Travel to reduce the ratio of CO2 emission (Demerjian, 2009).

3. SUSTAINABLE ASPECTS OF THE COMPANY:

SOCIAL RESPONSIBILITY:

TUI is a company with a perfect global nature and it also holds cultural diversity. The company has a vast network consisting of employees, customers and partners in nearly every country of the world. The collaboration of all these aspects can be helpful to form a network that is symbolized through knowledge transfer, intercultural co-operation and personal development chances. The company’s culture is to live up the social responsibility irrespective to wherever they are present. The company has also supported many social projects like: TUI collaborated with the Global Nature Fund (GNF) and launched an initiative named “Water for Africa” that focused mainly on fund-raising campaign to eradicate the problem of clean drinking water in Africa. Also, TUI got involved in projects helpful to improve the living conditions, promote the educational measures in order to protect the nature and to safeguard the biological diversity.

ENVIRONMENTAL POLICY:

TUI shares a responsibility towards the environment and the nature. As per TUI’s quality standards the environmental acceptance of products, services and the concerned process is a major factor. The company is planning to contribute towards the areas of climate protection. The success of the company lies in the safe use of natural resources and reduction of negative effects on the environment. All the employees execute their responsibility by behaving as per the rules and by following the steps necessary for preventing the environment.

COMPANY’S ETHICS:

Each and every employees associated with TUI should avoid financial or other business relationships either direct or indirect that can harm the repute of the company.

None of the employees should either demand or accept any gifts or benefits offered to them specially the ones that exceed the usual forms in an ethical business and are not within the legal limits.

The company does not accept any sort of corruption or bribery. In case they find any then the company will follow the international anti corruption standards.

TUI believes in fair competition. Any sort of fixing in price or in agreements is not acceptable and permitted by the company.

Each and every transaction in relation to the company must be well documented. The character and obligation of each and every party must be well mentioned. If there is no proper documentation then in such circumstances nobody should get involved.

WORKPLACE:

TUI prefers to have the best teams that are capable enough to stand to the expectations of the company. The company intends its team to perform rightly at the required time. The company rewards and recognizes the good work of their people. TUI aims at providing a positive working environment through communication and proper training. The company is good to retain its staff across the company with an intention to enhance their innovative, management and leadership skills. It is very important for the company to make sure that all the workers have the similar goals to that of the company. The conduct of the company ensures that the working is done with integrity, tolerance and within the national law of the country. The company prefers it workplace to follow diversity and keep away from the discrimination of gender, race, skin, colour, origin, etc.

MARKETPLACE:

There has been a major change in the market. Due to the mergers of main European tour operators, all the people responsible for the same are concentrating on increasing the profits. TUI has either stood first or second operator in all the major markets in terms of the market share. Such a situation can help the company to achieve an advantage through hotel buying, utilization of high quality aircraft and transfer services.

TUI has a varied and specialized product to offer and cater to a wide range of customers ensuring that it is not restricted to a particular market or customer segment. The company has a very flexible business model due to well managed lease-expiry of the aircraft sector.

The specialist market of TUI is featured by rapid growth and it is spread across the Europe. The company holds details of specialist brands. Through the acquisition of Sunsail in the year 1999 the company succeeded in creating world’s largest marine business. Acquisition of Exodus in the year 2002 helped the company to become leading adventure operator in the UK. The company achieved the small ship cuisine programme through the acquisition of Peregrine in the year 2005. Recently they have established a good reputation in the sports market through the acquisition of Australian Sports in 2007 and Gulliver Sports in 2008.

ACHEIVEMENTS OF TUI:

In the year 2009: TUI travel received the world’s Responsible Tourism Award.

In the year 2009: TUI Nederland received Green Feather Award for its sustainable tourism activities.

In the years 2008-2010: TUI UK & Ireland received an award for its work on sustainable tourism.

In the year 2009: TUI UK & Ireland received TTG Travel Awards.

In the years 2009 & 2010: TUI Marine was awarded Green Award for Service.

In the year 2008: First Choice was awarded best tour operator award.

In the year 2007: Peregrine Adventures was awarded best in Mountain Environment Award.

In the year 2009: Peregrine Adventures was one of the companies to have been awarded five Green Leaves for its sustainable tourism initiative.

(Source: TUItravelplc, 2010)

GOOD PRACTICES & BENCHMARKS:

TUI VALUES:

Being the leading travel group all over the world, TUI has a workforce of approximately 49,000 people. TUI operates in 180 countries and thus has a very unique and strong workforce. TUI is always eager to appoint the right people who have the required skills to generate the desired results but on the other hand they also believe in expanding the knowledge and skills of their present employees. The values of TUI give the staff a common aim to achieve the objective of making travel experiences special. The values of TUI are Responsible Leadership, Customer Obsessed, Value Driven and Playing to Win.

TUI CODE OF CONDUCTS/ POLICIES:

TUI’s code of conducts and policies state that their workers should get a good and well maintained environment to work within, the working conditions should be well organized, clean and also hygienic, their should not be any incident of child labour, all the employees should be treated equal irrespective of origin, colour, nationality, race, skin, ideology, age, etc., employments should be undertaken on the basis of interviews and finally TUI as a company should give respect and follow all the rules and regulations that come within the UK trading and business law.

TUI IS IMPROVING:

TUI has succeeded in achieving various benefits and has been able to make good progress in the recent past. The year 2010 didn’t have a good start but later on improvements were seen in the demand and trading was fruitful in all the source markets. The merger has helped to achieve various successes likely the exit from the planned flying operations in the UK and Germany and establishment of strong position in the Canadian market. Still the company plans to make various improvements in the profits. For now the company’s booking activity is good and also the demand for the different products is very high. However, the company is cautious about the coming years. Hopefully it will continue to achieve development and progress in the upcoming years as well.

ANALYSIS:

SUSTAINABILITY MAPPING FRAMEWORK:

A

B

High profitability

High social benefit (ideal position)

C

D

High

PROFITS

Low

Low SOCIAL BENEFIT high

(Source:- lecture slides week-2)

TUI is placed at (B) because TUI holds high profit margin and it is also making high social benefit. The figures presented for TUI are very much convincing. In the first half of the year 2011 there was a drastic turnaround through which company achieved a better position. Summer 2011 showed a better performance of the differentiated products. Moreover, the overall bookings of the company remained a lot ahead compared to the previous years. The revenues of the company for six months ended on 31 March 2011 showed a 5% increase. The figures rose to £5,205m from £4,969m. The net debt of the company was reduced by £171m focusing more on cash flow initiatives. Moreover, the board proposed interim dividend of 3.3p per share, which showed an increase of 3% (Source: TUItravelplc, 2011).

The revenues of the company for the three months ended on 31 December 2010 showed a 6% increase. The figures rose to £2,694m from £2,533m. The organic revenue of the company was 10% up by higher volumes. The source markets of the company showed improved performance. This particular quarter proved to be a better one for the company.

On the other hand, TUI collaborated with the Global Nature Fund (GNF) and launched an initiative named “Water for Africa” that focused mainly on fund-raising campaign to eradicate the problem of clean drinking water in Africa. Also, TUI got involved in projects helpful to improve the living conditions, promote the educational measures in order to protect the nature and to safeguard the biological diversity. TUI managed its profitability along with its social responsibility towards the society (Source: TUItravelplc, 2010).

Conclusion:

TUI has proved itself to be a successful and leading travelling company in the European market. For TUI Travel Company, sustainable tourism has been the most important part throughout its operation. There were some political, economical, socio-cultural, technological, legal and environmental aspects to be taken care of, but TUI stood strong and faces each and every obstacle that came its way. TUI is aware regarding its social responsibility, environmental policy, company’s ethics, work place and market place. Through the years, TUI has proved its better performance compared to all the other companies. TUI is more concerned about its values and code of conduct. Along with high profitability, TUI has also given the equal importance to social responsibility towards society.

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