The impact of change on the travel and tourism sector

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

Due to the current trends and issues causing change in the travel and tourism sector, the businesses have to adapt to the changes and redesign their products and services. Many changes brought by globalization, technology, world political changes, economics changes and people attitude towards tourism have reshaped the industry altogether. The impacts of these trends and changed can be described below in the context of a major tourism brands.

Due to the ageing of the population tourism, businesses are bound to hire older workers. Young people are more qualified and not willing to join the industry due to poor working conditions. Older people are less mobile and more demanding which will have impacts on wage rates and other costs to maintain staff.

Lifestyles of the people have changed and their attitude towards tourism services has changed a great deal. People are more demanding and more price conscious now. Firms must cut costs and their profits in order to survive in a more competitive environment now.

Technology have helped businesses cut down costs as it has enabled management to manage their resources efficiently and have reduced spare capacity. The increased use of telephone, 3G mobile and internet has helped consumers to access information regarding prices and value for money. This has resulted in a more intense competition. Hotels are responding to the situation by recruiting staff that have skills in information and communication technology.

Outsourcing is a key phenomenon in the modern tourism industry. Different products esp. food is obtained from other producers and it’s hard to explain the origin of the food to consumers plus it puts an extra push on the costs involved.

Globalization has not only benefited the tourism industry in terms of more revenue and clients but it has also been a sole reason for cheap & skilled labor. Skilled labor from poorer regions can be attracted to the industry at relatively cheaper rates which would result in lower employment cost for hotels and catering industry. Globalization also provides this wonderful opportunity to exploit economies of scale. Globalization can cause homogenization in services which might not be good from the customer’s perspective but brand names do ensure higher product quality.

Skills gap in the industry is adversely affecting the quality of services. Firms are in a position to charge prices of their own choice in such circumstances. However companies are finding a solution to the issue by providing on-job trainings or paying handsome wages to skillful workers and thus attracting more customers. However the wage rates are mostly affected by the local economic and industrial condition and educational level of the locality as well.

Hotel industry is greatly affected by the changes in law as well over the last few years. There is a strong emphasis on working time regulations, minimum wage laws and other working conditions regulations. Laws banning smoking in public places and restaurants etc. are also have impacts in the tourism business. Hotels are now seeking cost effective labor and are more into application of technology.

Government and other regulatory authorities are putting more and more pressure on catering firms now to take great care of hygiene and other food related issues. Greater awareness among the consumers related to diet and health have forced the catering businesses and restaurants to reduce the use of sugar and salt in their food. Due to the increased number of obesity cases, consumers are more conscious about the fats and calories rather than just taste. Customers want to know about the origin of the food as well. There is increased food labeling and more information is provided and displayed for the customers regarding the food and its ingredients. There is a great demand for food to be produced in a socially responsible way and this is helping in promoting good practices in the industry.

The tourism industry faced a serious setback after the incident of 9/11. The US war on terror and the Iraq war changed the entire industry all together. Many incident s of attacks on tourists, kidnapping for ransom and other political gains were witnessed which created a sense of insecurity among the tourists. Many countries and regions were declared unsafe for tourists. Apart from US, many other cities in Europe and UK were also the victims of terrorism. Madrid and the London bombing somehow created this perception among the tourists that EU member states were the targets of the terrorists. The impact of this is likely to be long term as it will take a long time to restore the confidence of the tourists. Due to this lack of confidence the tourism industry has lost a lot of business and there is a serious decline in investment in this sector. Working conditions have deteriorated and level of employment is showing a downward trend.

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

Many different businesses are facing many changes in the market. Such changes are economic, social, political and behavioral changes. Tourism industry is not an exception either. Over the last couple of decades the tourism industry has seen a tremendous amount of change and companies are always advised to adapt to these changes. Appropriate strategy and planning can make a company successful and make these changes as an opportunity rather than a threat. However, companies which are not being able to respond to these are likely to face many different failures and problems which are described below.

Loss in Sales & Revenues

Companies which are unable to respond to changes in the market, they are most likely to lose customers and revenues. Due to increased competition and market forces, tourism businesses are bound to charge a low price and earn little profit margin so any failure to adapt to market changes are most likely to cause losses financially.

Technology can save a great deal in this regard. Technology not only helps the industry to market their products but also helps in the reduction of labor costs. Different computer applications have made it possible to access and receive information and help in decision making process. A company is most likely to suffer a great deal if it’s unable to adapt to these technological changes.

Loss of Competitive Edge

As a famous saying goes “competition improves services”. Tourism industry is facing a strict competition and different businesses related to the industry are bound to cut down costs and still provide best quality services. By the proper change management strategy, businesses can obtain competitive edge over other competitors. The proper use of technology, hiring the skilled labor and other value added services can not only attract more customers but also be a cause of more market share. Failure to adapt to these trends and changes can be a reason of loss of competitive edge.

Loss of Goodwill

A business is most likely to damage its reputation in case of failure to adapt to changes and recent trends. A tourism business unable to provide valued services to its customers at reasonable price is surely going to lose its customers. Recent trends have shown that customers are most into green products and the hotels and catering industry are affected by this change a great deal. Hotels are expected to operate in an environment friendly manner and promote green practices. However if the businesses are unable to adapt to this, they are going to lose face in this changing market.

Regulatory Issues

Hotels, restaurants and catering businesses are bound to provide information regarding its products due to increased awareness among customers regarding food and its contents. Products labeling esp. in case of the catering industry has changed a great deal due to this trend. On the other hand there are now more regulations and laws related to the food industry. Use of some chemicals and other ingredients in the food products are banned. Smoking in restaurants and public places is not allowed. Similarly food businesses are properly inspected and regulated now.

If restaurants and catering businesses do not take into account all these factors they might be facing some serious regulatory actions in many cases. There are some cases recently where the customers have sued the hotels and restaurants for food related issues. Government regulatory authorities also keep a check on this industry so any negligence in this aspect can be a cause of some serious consequences as well.

Growth Issues

A company will not be able to grow and expand its business if it is unable to adapt to changes and trends. Tourism businesses must hire human resource with good knowledge of the technology and customers service needs. Use of the technology and skillful labor helps in cutting down costs. Companies in tourism industry must also work in an environment & social friendly manner because consumers are more aware and conscious now regarding environmental and social issues. They prefer to go for green products and thus can provide a competitive edge to the business. Failure to adapt to these changes and trends will result in decline in the revenue and thus growth will not be possible.

References:

http://www.tourismandmore.com/tidbits/confronting-change-in-the-tourism-industry/

http://www.tourismandmore.com/tidbits/why-tourism-industries-fail-part-1/