The issue and influences affecting the global tourism and hospitality industry
· Review the development of the industry and the reasons for change
Technology has played a role in the growth of the tourism industry. Customers are now buying their packages direct from the service providers not using intermediaries through the developments of internet and this is because of time scarcity. Also call centres has increased in the industry.
The development of infrastructure and transport system has allowed tourists to travel to and from destinations of their choices. The development of new materials has affected the design of the transport systems.
Changes in business practices; private and public sectors are focused and encouraging sustainable tourism. This change causes less damage to the environment and it strengthens the economy.
The change in lifestyle; the increase in car ownership has boosted the domestic tourism whereby people would travel to different place in their country during their spare time with family and friends and they would have more freedom in their own car.
· Evaluate the impact of government activity and political issues
The government makes the legal framework which the tourism businesses operate within it and the businesses must follow those regulations. These regulations may reduce the capacity to make profits due to high taxes. Government also helps in infrastructure development and it benefits the locals as well as the tourism industry. Sometimes the industry would be given financial assistance like tax breaks by the government.
In countries with political instability and ethnic unrest contributes to the fall of the industry hence the fall of their economy. Terrorism activities makes some countries to advice their people against travelling to such destinations.
The political issues include the trade blocs. Regional trade blocs like Southern African Development Community (SADC) increase trade among countries in southern Africa through the reduction of visa restrictions, promote cross-border movement of goods and people and helps in harmonizing national policies.
· Define the contribution of the industry on the economy and impact
Tourism industry alleviates poverty. Employment is created and jobs can be direct whereby employment is created in hotels, restaurants and other facilities that save tourist directly or it can indirect whereby jobs are created in the informal sector like vendors (see appendix).
Tourism improves the economic growth through foreign currency that tourists brought. The increase in the rate for money exchanges increases benefits to other industries. It contributes to the increase in income and well of a destination as tourists spend their money on different activities.
Also advances in food security whereby the food and hygiene standards in the hospitality industry helps the economic growth through the attraction of more visitors.
However, the economic impacts can contribute negatively on a destination. Developing countries mostly suffer from leakages because of foreign investment for tourism facilities, cost of imported goods and foreign exchanges and many more. Tourism can spread diseases whereby people from different countries and cultures may bring in diseases. Some of the tourists will be criminals or even terrorists.
· Evaluate the effect of trends in modern lifestyle habits
Technology developments; tourism and hospitality industry sell their products and services online. People now use online booking and online food ordering and this has changed the modern lifestyles.
Government stability; if a country is experiencing political issues and ethnic unrest lead people not to visit the country and this leads to the decline of the industry. Tax reduction; when governments offer tax reduction it strengthens the economy whereby people would spend more money in the industry. In generating countries economy will keep growing and hence discretionary income rises leading people to spend more money in tourism industry.
The other trend is sustainability, people nowadays prefer to visit places with positive impact on the environment and community and people now know the sustainability efforts the industry are taking.
· Evaluate the way in which external factors affect the industry and organizations within it
Corporate Social Responsibility is a corporation’s initiatives to assess and take responsibility for the company’s effects on environmental and social wellbeing (Investopedia.com). It helps in the creation of employment and more revenue in the community.
According to Wikipedia, globalization is the increasing interaction of people through the growth of the international flow of money, ideas and culture. Globalization helps in provision of employment, brings in foreign currency and helps in the growth of the economy.
Sustainability; sustainable tourism is a concept of visiting a place as a tourist and trying to make only a positive impact on the environment, society and economy (Wikipedia). Tourists are concerned with the nature and companies that are making impact on the environment and community.
According to Young Scot, ethical tourism is responsible tourism means thinking about the consequences of ones’ actions as a tourist on the environment, local people and local economy. Producers should practice ethical activities so as to promote ethical tourism.
The growth of global tourism and hospitality brands
· Define the characteristics and uses of branding
According to Laura Lake (2017), branding is a name, slogan, sign, symbol, design or a combination of these elements that identify products or services of a company.
Rick Suttle pointed out that, small company’s brands must be targetable that is business owners must identify the types of customers who are most likely to purchase their brands and companies must focus on narrower segments of the population for greater manageability.
Brand awareness as a characteristic is built through internet advertising, newspapers and brand logos and this would enable customers to recognizing the brand and the type of brand image (Rick Suttle, n.d).
According to Rick Suttle (n.d), brands must remain consistent throughout their existence and small businesses make numerous promises in commercials and ads about their brands and consumers expect companies to continue living up to these promises.
Categories of branding are family brands, individual brands and own brands. According to Kotler and Keller (2012), brand create mental structures that help consumers organize their knowledge about products and services in a way that clarifies their decision making provides value to the firm and brands identify the producer of a product and allow consumers to assign responsibility for their performance to a particular provider.
· Analyze the development of global tourism and hospitality brands
According to Raju Timothy (2016), the history of branding can be traced from the ancient marketplace, medieval marketplace, 19th century folks and lastly twentieth century.
§ Ancient marketplace – in ancient Babylon buyers were lured to purchase goods. 3000 years ago in Western Zhou Dynasty of China, they held trade fairs were they display their goods.
§ Medieval marketplace – the trading industry began to recover. Printing methods began and this helped in advertisement. Craft guilds were formed and middle class become known.
§ 19th century folks – pre-advertising and pre-branding spreads information identifying goods and quality of products.
§ Twentieth century – the use of internet helped the producers to market and create adverts and logos. Sponsorships by brands has also increased.
· Analyze the benefits of branding and brand loyalty
According to Doyle (2000), building a strong brand can translate into greater market share, ability to dictate a price premium and reduce promotional expenses which all result in greater incremental cash flow for the firm today and in the future and also allows for price premiums.
The brand helps to create brand loyalty and it reduces the risk in purchasing to the customer. Susan Gunelius posted that brand loyalty is the consumer’s emotionally-changed decision to purchase a specific brand again and again. Its benefits include customer loyalty and acceptance of products and extensions.
· Explain the use of tourism and hospitality globalization strategies and their risk
The tourism and hospitality globalization strategies include franchising, mergers, acquisitions, strategic alliances and many more. According to the Business Dictionary, franchising is an agreement where one party grants another party the right to use its trade-name as well as certain business systems and processes to produce and market a good and service according to certain specifications like the Holiday Inn hotels. In franchising there is speed of growth, improve valuations and increased profitability. Their risks include some of the branches will fail to follow the standards and the accounting systems.
Merger is a transaction where two firms agree to integrate their operations on a relatively co-equal basis because they have resources and capabilities that together may create a stronger competitive advantage (Anurag Savarnya, n.d). According to Anurag Savarnya, mergers are carried out to increase market share, economies of scale, profit for research and development and also they have risks which includes clash of corporate cultures and employees maybe resistant to change.
Another globalization strategy is an acquisition. According to Anurag Savarnya (n.d), an acquisition is a transaction where one firm buys another firm with the intent of more effectively using a core competence by making the acquired firm a subsidiary within its portfolio of business like Hilton International by Ladbroke. In acquisitions the market share increased, increased diversification, avoid excessive competition and their risks include inadequate valuation of target, inability to achieve synergy and finance by taking hug debt (Anurag Savarnya, n.d).
The tourism industry is one of the world’s largest industries hence reducing poverty by creation of employment and businesses. Tourism generates foreign currency and this helps in the growth of the economy. Tourism industry has inter-relationships with other sectors like transport sector and it helps to shape the industry. Transport developments have contributed in making some destinations accessible. However, technology is taking over jobs like in bookings thereby resulting in unemployment leading to poverty.
The role of stakeholders should be emphasized as they are suppliers who provide all principles required in the tourism industry. Sustainable tourism should be achieved so as to reduce negative tourism impacts and produce economic benefits for the community.