PEST Analysis for a Company in the Tourism Industry Essay

The Tourism industry is one of the fastest growing industries in theworld. The World go away and Tourism Council estimates that in 2004Travel and turnistry is evaluate to generate* US$ 5,490.4 billion of economic activity* 10.4% of summate gross domestic product* 214,697,000 jobs or 8.1% of total employment* 12.2% of total exports 1My task is to conduce a PEST analysis for a caller-up within the Tourismindustry.Within the tourism industry, I arrive at to select one atomic number 18a of interestlike transferee, accommodation and transportation etc. and thenone company doing occupation with these sectors cerebrate with thetourism. concord to Leiper ?Transportation is the only(prenominal) link between thetourist-generating region and destination region?2So, transportationwas a to a greater extent interesting sector to discuss in the report unless I tried to dominate a company which is relate with all these main sub-sectorsdiscussed preceding(prenominal) in the report.I have decided to look in the U.K commercialize for much(prenominal) company beca mapping?Tourism is one of the largest industries in U.K, worth approximately75.9 cardinal to the U.K economy in 2002 and supporting around 2.1million jobs.? 3During my research on profit I found many companies offeringservices in the tourism of U.K but I have decided to choose ? aloneTravel? because of its variety of services offering related with theaccommodation, transportation and attractions.1.2 Problem FormulationIn the problem formulation discriminate of my report I would expound theoverall situation of the U.K Tourism industry. The service concept of? obviously Travel? will give us information ab come out of the closet the services providedby the company. I will come on out just about the customers, competitors ofthe company. I will visualise out what political, economical, social andtechnological factors takeing the company and its demand situation.1.3 LimitationsThe biggest limitation for create verbally this report is time and the pagesto write. It is a broad topic and it could be rectify presented ifavailable to a greater extent time and space to write about, but still I have triedto luxuriouslylight some main points raised during my finding. My knowledgeabout the company ? barely Travel? is earnings-based and I could notable to contact the company for further information. collectible to the lackof information about the company I will only describe one component ofthe Service Management System. I will be describing only the OT partof the SWOT analysis.1.4 MethodologyBeing inspired from the Service Management System I will describe theservice concept of the company .I will conduct a P.E.S.T analysis tofind out the political, economical, social and Technological factors alludeing the company. From SWOT analysis, I was conducting OTanalysis to find opportunities for the ?Simply excursion? in future.1.5 DataI will use Secondary selective information collected from variant industry reportsavailable on internet for my report. Data provided in conductingP.E.S.T analysis has been taken from www.statistics.gov.uk.Chapter 22.1 Simply Travel?s Service Concept4Established in 1978, Simply Travel has been providing snuff it solutionssince 26 years for the discerning operates who need more from their spend than just a decent tan. Not through the fight-ridden grocery storeingtactics, but by providing an attractive alternative to mass- foodstuffpackage holidays has lead ?Simply travel? to gain a big loyalty poolamong the holiday travellers.Mentioning about the content services provided by the, company provideshand- picked properties to meet the individual needs of its customers.ski holidays, winter sun, Family holidays (special locations forfamily holidays with child c ar) helpful staff, peace of mind and preventive during the whole travel argon the core services provided by thecompany.Unparalleled service, late availability, nannies for kids , pleasantexperiences for its customers atomic number 18 the peripheral services provided bythe company.2.2 Service PackageService package provided by the company for different holiday travelsincludes all advertiseport taxes, flights and transfers, accommodationincluding breakfast and meals and the service of its representatives.Chapter 33.1 CustomersHolidaymaking is the main footing that UK residents travel abroad. Asthe company deals with the both inbound and outbound tourism I willhave a brief look on the inbound and outbound market. itemize ofoverseas visits by UK residents outgrowthd to 59.3 million in2002.Expenditures by these visitors, excluding international fares27.07 billion-slightly heightser than the total for the domestic market(which includes fares).Describing about the demographics of the customers, most of thecustomers are families with children and older people but latest trendhas been seen in the youth to take holidays.3.1.1 Customers? Buying BehaviourConti nued concerns over safety and security while locomotion are foundin the customers for holiday travels. Tourists are progressively buyingexperiences rather than a usual routine holiday. They try to find aparticular activity.The arouse blockades at U.K petrol stations, the events of 11thSeptember 2001, the foot and mouth outbreak, SARS and Iraqi struggle hashad continuous call for on the buying behaviour of UK market customers.Consumers are showing a continuing search for value for money fromtheirholiday choices. Consumers expect more choice, individuality andvariety.3.2 CompetitorsAggressive marketing by low-toned appeal childs playlines and internet bookingagencies present a big challenge for the holiday market. Airlines likeBritish Airways are offering customers to make their own travel plansthrough internet. Travel agents argue in variety of ways i.e. price,quality and the package itself. Companies offer special discountedpackages and also compete on branding. As there are hundreds oftravel agents in the U.K market so, it?s difficult to specify thecompetitors in the market. Travel select, Expedia, Travelocity, Ebookers and Thomas cook etc. are the big names in the market andoccupy the bigger part of holiday sales for the U.K customers.3.3 MarketI can say that market is in a state of perfect competition and noindividual consumer and travel agent is in position to affect themarket.Key success factors for ?Simply Travel? are* in force(p)ly segmented and targeted adventure travellers marketwithin the larger travel market.* Successfully positioned as travel specialists.* Personal interaction, media and marketing.* Repetition of customers, Loyalty pool3.4 PEST analysisTo assess the market for the business of ?Simply Travel? I willconduct PEST analysis to find out about the Political, sparing,Social and Technological factors in the external macro- milieu.3.4.1 Political FactorsPolitical arena has a huge influence upon the regulation of businesses.It inc ludes government regulations and legal issues under whichbusinesses should operate. accord to the findings, political environment of U.K. is quite enduring.Issues like enlargement of European Union and war against terror havehad aneffect on the political stability of the government.In reply of growing consciousness of the environmental consequences, U.KGovernment is planning actions to ensure aviation reflects itsenvironmental fixs. Proposals are emerging for a tax on aviation arouse and VAT on air tickets.Government?s taxation policies and decision about the increasing thepetrol prices have affected the buying major office of the individuals inU.K.The political decision as to whether a UK sign up to single Europeancurrency is again having an effect on the businesses.3.4.2 Economic Factors Economic factors affect the purchasing power of potential customersand also affect the individual companys offerings.U.K economy is benefiting form gradual low inflation rate. Inflationrate I nflation rate cast off to 1.3% in February 2004.In U.K, unemployment is low. According to labour market statistics inJanuary 2004 fell down to 4.8 per cent. Job confidence is high andbecause of this confidence spending by consumer is also high.Predictions point to continuing gross domestic product growth over the period averagingaround 2.4% a year (GDP rose by 0.9% in fourth quarter of 2003), withreal household disposable income rising at a somewhat faster rate.Household expenditures rose to 0.9 per cent with the increase indisposable income.The UK?s deficit on trade in goods and services in February 2004 stoodat 3.2 billion ?compared with the revised deficit for January of 4.4billion.Continued sales growth has been observed during the past few months inthe UK economy.Exchange rates are favourable for UK residents for travel abroaddue to strong position of British Pound against the other foreigncurrencies. ?Euro? used as a single currency in many Europeancountries, is also stable against the other foreign currencies. up-to-the-minute predictions for the UK economy suggest that it will last out oneof the strongest economies in the world over the next five years, withlow inflation (inflation fell to 1.3% during February 2004), lowunemployment and reasonable economic growth.The downside is that disparities between the wealthier parts of thecountry, not all in the south east of England, and pockets ofdeprivation, will get wider, with implications for travel demand.These are possible to influence the growth of the UK resident travelmarket.3.4.3 Social FactorsA trend of getting internet access at home and buying online isdeveloping in the UK. According to statistics in September 2003, 11.9million households online were recorded.Listening to music or radio is a everyday choice among the UKresidents.92% of people content to spend their evenings and weekendswatching TV or hired videos. To socialize, most people think toentertain family and friends at home rather than red out (79%).A great trend has been seen in U.K population about diet and healthissues in the recent years. This trend leads towards the need of morefitness clubs and organic pabulum for the people from U.K Changes in thestructure of the population because of the immigrants from Europe,Asia and Africa etc. will also affect the supply and demands of goodswithin the U.K economy.Continued concerns over safety and security while travelling are foundin the U.K residents.Lifestyle changes have also been affecting the U.K travel market for anumber of years. Postponing the start of the family and an increase inthe number of households consisting of couples with two incomes arethe main trends toward the changing life-time style. Changing fashions,which are difficult to predict also have an affect on the market.3.4.4 Technological FactorsThe rapid development of technology is affecting the businesses in UKand all over the world. Changes in the technology have changed the waybusiness es operate i.e. network booking for tickets and holidays.Faster changing development in technology creates a need to reactquickly for different businesses in order they want to maintain thecompetitive environment by providing the same innovative services,which their competitors are offering.Distribution of products by the use of technologies e.g. marketinginformation systems, customer relationship management are also commonpractices with different businesses for effective services to theircustomers.Chapter 44.1 Impacts on demand situationFindings from the PEST analysis will alter me to comment on theimpacts on the demand situation of the customers of the ?SimplyTravel?.ElasticitiesChanges in the step demanded due to change in price and income arevery important for the tourism industry. climb disposable incomeamong the UK residents is the positive indication for the ?SimplyTravel? that people will have plentiful money to buy company?s products.However, Government?s fiscal polici es for tax on aviation fuel and VATon air tickets will impact the company?s supply of services at thesame rate. Higher prices of the tour packages will lead to lesserdemand among the UK residents.Cross-Price ElasticitiesNot only a price change in the UK due to taxes is important but alsothe price of the facilities in other destinations wherecompany servesis also important. For example rising prices in Italy, Spain etc. fordifferent tourism related products will also make supply of productsexpensive for the tourists.TrendsLatest trends of home- entertainment and more awareness about the dietand health-issues does also have an impact on the demand of thetourist. connection will have to compile the Supplies of servicespackages with variety of facilities available gibe toindividual?s choice, so it can make supply of the products a bitexpensive for the customers.Purchasing methodGrowing head up purchases of holiday packages from airlines will impactthe demand situation .Buying the pac kage direct from suppliers i.e.Hotels, air lines will decrease the demand of the tourists.Moreover, low inflation rate and high employment rate and favourableexchange rate will increase the buying power of the tourists so itwill increase the demand in British holiday travellers for the holidaytravels abroad.4.2 OT analysisTo find opportunities and curses from the external environment forthe ?Simply Travel?, I will conduct the OT analysis.4.2.1 OpportunitiesOpportunities exist for ?Simply Travel? in expanding the servicepackage according to the latest trends such as* Packages with individual concerned Diet and health matters* Adding particular activities for the tourists, providingexperiences* Providing more choice, individuality and variety.And providing the real value for the money of the tourists.4.2.1 ThreatsCheap airlines adding facilities for the travellers to make their owntravel plan is the biggest flagellum for the company.Government?s decision to add taxes on aviation fue l and VAT for airlines arealso a main threat for the company.Latest trends of home entertainment i.e. listening radio, watching TV,Inviting family and friends are also operose the company.Terrorist attacks like 9/11 is also a big threat for the company.Chapter 5ConclusionI conclude my report by saying that the Holiday Travel market in UK isin a state of perfect competition. Though there are positive signs inthe economy for present and near future and buying power of theindividuals is increasing day by day but still ?Simply Travel ? is in need to expand its service package according to the latest trends.1 http//www.wttc.org/2004tsa/frameset2a.htm2 Tourism, principles and practices,2nd edition,pp53 www.staruk.org.uk4 The information used in describing the service concept and servicepackage of ?Simply travel? are obtained from www.simply-travel.com.