HOW TO WRITE UNIT 1: THE CONTEMPORARY HOSPITALITY INDUSTRY?
Travel and tourism industry is growing at a rapid phase and contributing a significant part of the GDP for several developed as well as developing countries. Trends in travel and tourism industry are changing at a fast pace due to which industry players involved in travel & tourism industry are tracking these changes so as to remain in the business. There are several issues faced in the travel and tourism industry from time to time and these issues need considerable attention from the host country government as well as industry players. These issues are currently driving the entire travel & tourism segment. Further there are changes happening in the external environment and travel & tourism segment need to respond to these changes in order to remain in line with the changing trends in the external market. The present paper would analyze the issues faced in the travel and tourism sector in South Africa and there would be three learning objectives which would be accomplished through present paper and can be given as under:
LO1 Understand current issues in travel and tourism sector
LO3 Understand how the travel and tourism sector respond to change
LO4 Understand the impacts of change on travel and tourism sector
These three learning objectives would be attained through present paper for discussion of the contemporary issues in travel and tourism industry with specific reference to South Africa.
1.1 Analyze issues currently driving change in travel and tourism sector
There are several key issues driving change in the travel and tourism sector in South Africa would include the political, economical, technological, globalization, health & safety and environmental issues. Considering the environmental issues affecting present age travel & tourism industry in South Africa it can be said that climate change (especially global warming) is one of the most popular reason which has driven several changes in the travel & tourism industry. With changing climatic conditions and excessive global warming at particular places attention of the tourists has shifted from these places to destinations having good climate. South Africa is one of the key tourism destinations having high number of tourists visiting the country for its heritage & cultural significance. In year 2013 there were more than 4.2 million people visited South Africa for several tourism purposes such as medical tourism, cultural tourism, heritage tourism and eco-tourism activities. Number of tourists visiting South Africa has increased from last year level by 12% and this growth is much more as compared to other sectors in South Africa. Further considering from the revenue part, tourism continues to contribute more than 24% of the overall GDP for the country with direct & indirect sources of revenue (Withey, 2012).
South Africa is considered to be politically stable though there are some political issues faces by country in past time pertaining to discrimination and all such issues affect the popularity of a particular destination among tourists. Terrorism is also considered as one of the most important factor which tourist look while selecting a tourism destination. South African economy offers motivation for the tourists as the currency in South Africa has much lower value as compared to the tourism source countries such as Russia, UK and USA. Tourists coming to South Africa would be having much higher spending power as compared to the local tourists in country. Technology is enabling several positive changes in South African tourism sector wherein trends such as e-tourism, promotion through online mediums and availability of information on web sources allows consumers to gain insights of the particular tourism destination in advance. Online booking system and bidding for the lower tour package has allowed tourists to book their facility arrangement in advance.
Globalization is the buzz word in present age travel & tourism segment in South Africa wherein multinational tourism organizations has their key role in changing the entire tour operator industry. Further, with globalization of the infrastructure organizations tourism destinations have been developed with world class facilities due to which tourists are able to avail all facilities on their tourism destination (Tribe, 2011). Health & safety of tourists has become prime importance area for the host countries wherein South African government has taken several measures in order to ensure security of the tourists coming to South Africa. This would encourage the tourists coming to South Africa and attract higher number of tourists in coming years. All these issues are driving change in South African tour and travel industry and need special attention so that South African tourism industry can grow further (Beaver, 2002).
Current issues pertaining to travel and tourism industry in South Africa can be analyzed with the help of primary and secondary research methods. Primary research methods can be used in order to understand the issues which are shaping the tourism industry in South Africa from different stakeholders such as tourists, tour operators, government and employees working in the tourism sector in South Africa. Questionnaire and interview can be designed in order to assess the issues which are shaping the present age tourism industry in South Africa. Collecting fresh data pertaining to the issues faced in South African tourism industry would reveal possible issues and industry experts can be interviewed in order to develop measures to tackle these issues (Likorish & Jenkins, 2012).
Secondary research methods can also prove of high importance for the host country in order to understand possible issues which are available in South African tourism industry. Secondary research would include referring literature pertaining to tourism industry in South Africa, exploring books and journals pertaining to tourism industry in South Africa. These sources would contain the information pertaining to the issues which are faced currently in South African tourism industry (Leiper, 2003). These sources are of immense importance in order to analyze each issue with detailed information so that measures can be developed in order to deal with these issues in travel & tourism industry in South Africa. Hence both primary and secondary methods can be adopted in order to understand the changes which are taking place in the travel & tourism industry in South Africa so that these issues can be handled with utmost care and possible way out can be developed to deal with these issues.
For the present context of exploring the current trends in travel and tourism sector topic of eco-tourism in Costa Rica has been selected. The phenomenon of eco-tourism can be defined as the visit to fragile and pristine part of the tourism destinations and these parts of the tourism destinations are considered to have close connection with the nature. The present task would analyze the emerging trends in eco tourism sector of Costa Rica and their impact on overall travel & tourism sector worldwide (Wilkerson, 2003). Further present task would also explore the appropriate technique which can be used in order to establish the emerging trend in travel & tourism sector of Costa Rica. Further present task would explore the eco-tourism case for Monteverde cloud forest which is located in Costa Rica and known for its natural beauty around the world forming an important part of the overall eco tourism activities in Costa Rica.
2.1 Evaluate current trends influencing changes in the travel and tourism sector
Current trends for the present context of eco-tourism in Costa Rica can be given as under:
§ Commercial value: In general, eco tourism activities have lost their significance as commercial value generator as people are losing their interest in the eco tourism activities. But looking into the ecotourism activities in Costa Rica it can be said that this place has high significance as commercial value and known around the world for eco-tourism activities. With increasing commercial value for eco tourism destinations interest of the stakeholders has started increasing in the tourism activities (Sharpley, 2009).
§ Lower environmental decay: The major benefit from eco-tourism activities would be their low adverse impact on environment. This would further lead to shift of trend in the entire travel & tourism sector thereby protecting tourism destinations from harmful impacts of tourism activities.
§ Sustainable tourism: Eco-tourism activities would be able to encourage sustainable tourism for the host countries wherein local community people would be able to take part in the tourism activities and these activities would become a continuous source of revenue and employment for them (Lavery, 2006).
§ Young generation; Young generation which was not attracted earlier towards eco tourism activities is now a day involved into visit to such places looking into the natural beauty and attraction these places offer for the younger generation. This has increased the overall popularity and income which is generated through promotion of these destinations.
§ Increase in number of tourists: It has been observed that numbers of tourists are increasing rapidly in low of awareness among tourists regarding eco tourism activities in Costa Rica. In year 2013 number of tourists have increased by 28% as compared to the total number of tourists who have visited Costa Rica in year 2012.
2.2 Analyze a current trend using appropriate technique and resource
For the present context of analyzing current trend in the Eco tourism activities in Costa Rica, technique of secondary research method can be adopted. Secondary research methods can be used in order to extract the information through existing resources such as literature, relevant research, journals, articles and newspapers etc. All these sources are considered to be the rich source of information pertaining to the particular field of interest and information available with these sources can be used in order to explore the key trends in the travel & tourism field as well. For the present task secondary research method would be used in order to understand the key trends in eco tourism of Costa Rica (Quinion, 2005).
An emerging interest area for the eco tourism in Costa Rica can be identified by the Monteverde cloud forest which is known for its eco tourism activities in present days and high numbers of tourists are coming to the place for visiting the beauty and attraction features associated with Monteverde cloud forest. This cloud forest is rich source of both flora and fauna and contains more than 2500 species of plant, more than 100 species for mammals, 400 species of birds and 120 reptile species.
Figure 1: Showing the Monteverde cloud forest
There are several new businesses witnessed for the Monteverde cloud forest and 80 emerging businesses based on the tourism activities have been observed in Monteverde cloud forest. There are several biological reserves present in the Monteverde cloud forest and Reserva Biologica Bosque Nuboso and this biological reserve covers more than 10,500 hectre area. This biological reserve is one of the famous attraction places for the tourists coming in Costa Rica and attracts high number of tourists. This biological reserve is also important from the economic point of view as there has been increasing revenue and employment reported due to the presence of this biological reserve in this tourism destination (Levy et al, 2011).
LO3 Understand how the travel and tourism sector respond to change
For the present task Helsinki has been chosen the tourism destination for which SWOT and PESTEL analysis would be carried out. SWOT analysis for Helsinki can be given as under:
§ Strength: Helsinki is considered as one of the highly attractive destination for domestic as well as international tourists. China has high attraction towards Helsinki due to which there are more than 65% of Chinese tourists coming in Helsinki out of their total strength of tourists. Helsinki is one of highly appealing and attractive tourist destination. Weakening Euro value in country has lead to attraction for foreign tourists as their spending power has increased. Helsinki has significant investments in online promotion for tourism activities which makes it possible to attract large number of tourists.
§ Weakness: Some of the major countries which form the source country for Helsinki tourism destinations are under great recession at present due to which Helsinki has lower consumer coming in the present time. Growth of tourism sector in Helsinki is considered to remain low due to lack of infrastructure development in country (Korstanje, 2007).
§ Opportunities: China is the biggest market for Helsinki tourism destinations and large Chinese population offer good opportunity for Helsinki tourism destinations. Lower value for Euro would open big opportunities for Helsinki as tourists coming from outside Europe would be at advantage and there would be higher number of tourists coming to Helsinki from international locations.
§ Threats: US debt ceiling issue is pulling not only US but several European countries towards recession which is a big threat for tourism segment in Helsinki. New regulations for China’s outbound and inbound tourism market would lead to lower Chinese tourists coming to Helsinki.
PESTEL analysis for Helsinki can be given as under:
§ Political factors: Political stability and supporting political laws in Finland makes it convenient for the tourists round to world to come to Helsinki for spending their holidays and visiting tourism destinations.
§ Economical factors: Lowering Euro value and lower tax would attract tourists not only from the domestic destinations but also across the world. This would lead to growth in Chinese tourists in Helsinki.
§ Social factors: With increasing number of nested families and changing trends in tourism industry it would be possible for the tour operators to design tour package in accordance to the need of tourists coming in Helsinki.
§ Technological factors: Technology has played a key role wherein online reservation and information availability on net would play major role for promoting tourism across the world (Lew, 2008).
§ Environmental factors: Changing environmental condition and development of eco-friendly tourism ways has helped in development of the environmental friendly tourism destinations.
§ Legal factors: Supportive legal regulations in Finland would make it possible for tourists to come in the country and spend their holidays (Moscardo et al, 2007).
3.1 Analyze how travel and tourism sector could respond to change
Travel and tourism segment in Helsinki is undergoing change and it would respond to change by deploying strategic approach for managing these changes. Travel & tourism industry players in the country need to develop the strategic partner and should look for long term association with these strategic partners in order to ensure sustainable business model. Industry players need to develop the strategic partnership for transportation, food and accommodation so that they can offer all possible facilities with convenience. Changing trends in consumer behavior and pattern can be responded by designing tour packages in accordance to the consumers. Changes in technological domain can be responded by providing information online and tour operators need to develop system for making booking through online sources so that tourists residing in other countries can take benefit of technology to avail tourism services. Changes in economy domain can be responded by offering discount to the tourists so that they can be attracted towards the offerings made by tour operators for the particular tour.
3.2 Develop strategies on how selected travel and tourism businesses could respond to change
The major strategy for responding to change would be tracking the changes and building solution in accordance to the consumers in travel and tourism industry. The strategy adopted by tour and travel industry player should be customer centric where consumer should be considered as the prime focus for the company and all efforts need to be developed around consumers. Changes in the external market are happening in such a way that these changes would reduce benefits for the consumers in travel and tourism segment. The strategy developed by host countries should be such that value proposition offered to consumers can be maximized so as to attract high number of consumers in Helsinki. Consumer centric strategy for the present context can be developed by understanding changes in the destination, arrangement and prices required by consumers (Jonathan, 2009). These changes need to be understood and it needs to be ensured that tour operators are offering this proposition to the tourists. Further information need for the tourists need to be fulfilled by developing online sources from where tourists can gain essential information regarding Helsinki tourism destinations.
3.3 Justify strategies for how selected travel and tourism businesses could respond to change
The strategy developed in present context would be consumer centric and this strategy is suitable for the tour industry players as this would allow consumers to have high value proposition wherein they can maximize their benefits and pays lower cost for tourism activities as compared to the other tourism destinations. Understanding consumer needs would be the most important part of the present strategy wherein need for tourism destination, kind of tourism (heritage, cultural or eco-tourism) and pricing for the tourism activities need to be known so that consumers can be offered value proposition in accordance with their need. In addition to this consumers would be offered price discount so that their purchasing power can be enhanced. Also customer service would be highly emphasized in the travel & tourism segment in Helsinki so that high consumer satisfaction can be provided and repeat consumers can be obtained for Helsinki by providing high level of customer service. Consumer feedback and suggestions would be taken in order to improve upon the tourism destination and services offered at particular tourism destination so that consumers can themselves make improvement in their tourism experience. Tourism industry in Helsinki should focus on creating consumer experience in the tourism industry.
Current age tourism industry
Tourism industry in present age has evolved as the major contributor to economy and has high importance in life of people. There are several factors which are driving change in the travel and tourism industry at present while these factors were not of any importance earlier. For example, marketing & communication has evolved as the key factor in present age tourism industry as it creates awareness and higher revenue for the tourism industry players across the world. Despite of having natural beauty and charm some of the tourism destinations are not able to gain attention from tourists as these locations are not popularly known by tourists. Further present age tourism industry is driven by increasing spending power and availability of information pertaining to particular tourism destination (Quinion, 2005). Mass tourism activities are not observed so frequently and there is trend of nested families travelling with specific purpose and tour operators need to design their package in accordance to these consumers only. Tourism in present age has taken several forms wherein purposes of tourism are driving the particular destination which are popular among the tourists not only in the domestic country but also among the international tourists coming to these destinations. Brand building activity has got immense importance in the tourism industry wherein each host destination is trying to portray itself as a brand which would create entire consumer experience rather than just offering the visit to a particular place. This development of brand helps the host country to portray itself as a complete destination which can be offered to consumers in order to come and spend their holidays.
Buyer, supplier and competitor analysis
For the present task Hotel Kemp has been selected which is one of the well known hotels in Helsinki. Hotel Kemp is one of the historical hotels in Finland and was established in year 1887 and this hotel is a part of the famous hotel chain named Starwood Hotels and resort. Buyers of this hotel belong to higher segment wherein they are having lower price sensitivity for the prices as compared to the consumers having higher price sensitivity. There is need for higher degree of customization and due to high level of customer service in Hotel Kemp there is loyal customer base which company enjoys since long time. There are several hotel players in nearby region but availability of these hotels would not limit the competitive strength of Hotel Kemp which is basically due to their efficient customer service element (Cooper, 2005). Some of the major competitors of Kemp hotel would include GLO hotels, Finn and Hilton Helsinki etc. These hotel chains are well established and having good reputation among consumers thereby giving stiff competition to the Kemp hotel. Buyers are price insensitive, having limited choice and there are large numbers of buyers available in Helsinki due to availability of tourism site in the place. This would lead to lower buyer bargaining power for Hotel Kemp. Suppliers are having high bargaining power in hospitality industry in Helsinki as there are very less number of supplier available and in the premium category there is scarcity of the suppliers which insist Hotel Kemp to purchase their goods through single supplier only. Reliance on a single supplier further enhances the supplier bargaining power for the suppliers available in the hospitality industry in Helsinki.
4.1 Analyze the impacts of issues and trends that drive change in travel and tourism sector
Issues and trends in travel & tourism industry in Helsinki have high degree of impact due to which these factors are driving the entire travel and tourism industry. There are mainly four factors which are mainly driving the travel & tourism industry and these factors would be analyzed in the present context of Helsinki. Demography is a big changing trend in the travel and tourism markets. With changing demographic pattern there are high numbers of young adults as compared to the older people. These young people would like to stay in nested families and are more inclined to visit the places which are made for entertainment & luxury instead of heritage & cultural tourism activities. This would lead to make a shift for the tourism industry to develop tourism sites which are having entertainment & luxury for the visitors. Further these people would be visiting in small groups instead of big groups in which earlier people were used to visit the particular tourism site. This change would make impact for the tour operators wherein they would have to design the package in accordance to the consumer need in present age and all arrangements need to be done in accordance to the requirement of young adults in current age (Karanasios & Burgess, 2008). Technological change has lead to higher number of consumers making their bookings through online sources and information is also taken by the consumers through online sources only. This has forced the major tourism sites to get online and offer their information by several sites. Even branding & promotion is also being done through online methods so that the changing trend can be adjusted. Also tour operators also need to have their online presence and this online presence would lead them to higher number of consumers by making online reservations and offering lucrative offers on the promotional media.
4.2 Discuss the likely consequences of businesses failing to respond to market changes
Present age travel & tourism industry demands changes due to changing consumers’ characteristics and impact of the external factors impacting the travel & tourism market. In accordance with the changing consumer profile or need and external factors a business within travel & tourism industry have to make changes so that it can remain as per the consumer expectations and consumers can develop interest in the services offered by the travel & tourism businesses. Businesses which are not in accordance to the consumer demand would be out of the market as consumers would look for other alternatives. This would impact upon the overall market share gained by that particular business.
In addition to this businesses which are failing to respond to the market changes would not be having any competitive advantage as consumers would not prefer these businesses. Competitive advantage development is the main aim for business organizations and without competitive advantage these businesses would not be able to survive in the market for longer time period. Competitive advantage would also help these businesses to deal with the high competition present in the hospitality industry. Industry players in travel & tourism manage this competition with competitive advantage gained by them and in case these businesses would lose their competitive advantage such businesses would be wiped off from the market (Wilkerson, 2003).
Organizational efficiency and consumer satisfaction would be two major parameters which would be affected by businesses not responding properly for the change. Efficiency of an organization would reduce in case it is not responding to change and there would be higher wastage for the organizational resources as their efforts would go in vain (Holder & Floyd, 2009). For example, a business which is not responding to change and putting high amount of investments in the promotional activities would make wastage of resources as such promotional activities would not yield any benefit for the organization. Consumer satisfaction for the businesses in travel & tourism industry would also reduce as consumers would not be able to get the desired services from the travel & tourism industry.
From the present paper contemporary issues faced by travel & tourism industry has been explored along with the impact of these issues on the businesses pertaining to the travel & tourism industry. Present paper has evaluated the issues which are faced currently in travel & tourism domain, analyzing impacts of changes on the businesses pertaining to travel & tourism and finally analyzing the impacts of changes in the travel & tourism industry.
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