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PEESST T AAnalnalysiysis s ffor or a a CComompanpany y iin n tthe he TouriTourism sm IIndunduststrryy T ThheeTToouurriissmmiinndduussttrryyiissoonneeoofftthheeffaasstteessttggrroowwiinnggiinndduussttrriieessiinntthhee w woorrlldd..TThheeWWoorrllddTTrraavveellaannddTToouurriissmmCCoouunncciilleessttiimmaatteesstthhaattiinn22000044 Travel Travelaannddttoouurriissmmiisseexxppeecctteeddttooggeenneerraattee *U *USS$$55,,449900..44bbiilllliioonnooffeeccoonnoommiiccaaccttiivviittyy * 10. * 10.4% 4% of of ttototal al GGDDPP *214,697, *214,697,000000jjoobbssoorr88..11%%ooffttoottaalleemmppllooyymmeenntt *12 *12..22%%ooffttoottaalleexxppoorrttss[[11]] M
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I have have decidecided ded tto o llook ook iin n tthe he UU..K K mmararket ket ffor or ssuch uch comcompanpany y bebecausecause “ “TToouurriissmmiissoonneeoofftthheellaarrggeessttiinndduussttrriieessiinnUU..KK,,wwoorrtthhaapppprrooxxiimmaatteellyy 75 75..99££BBiilllliioonnttootthheeUU..KKeeccoonnoommyyiinn22000022aannddssuuppppoorrttiinnggaarroouunndd22..11 m miilllliioonnjjoobbss..””[[33]] D DuurriinnggmmyyrreesseeaarrcchhoonniinntteerrnneettIIffoouunnddmmaannyyccoommppaanniieessooffffeerriinngg servi servicceessiinntthheettoouurriissmmooffUU..KKbbuuttIIhhaavveeddeecciiddeeddttoocchhoooossee““SSiimmppllyy Trave Travell””bbeeccaauusseeooffiittssvvaarriieettyyooffsseerrvviicceessooffffeerriinnggrreellaatteeddwwiitthhtthhee ac acccoommmmooddaattiioonn,,ttrraannssppoorrttaattiioonnaannddaattttrraaccttiioonnss.. 1.2P 1.2PrroobblleemmFFoorrmmuullaattiioonn I InntthheepprroobblleemmffoorrmmuullaattiioonnppaarrttooffmmyyrreeppoorrttIIwwoouullddddeessccrriibbeetthhee ove overraallllssiittuuaattiioonnoofftthheeUU..KKTToouurriissmmiinndduussttrryy..TThheesseerrvviicceeccoonncceeppttooff “ “SSiimmppllyyTTrraavveell””wwiillllggiivveeuussiinnffoorrmmaattiioonnaabboouutttthheesseerrvviicceesspprroovviiddeedd byt bythheeccoommppaannyy..IIwwiillllfifinnddoouuttaabboouutttthheeccuussttoommeerrss,,ccoommppeettiittoorrssooff t thheeccoommppaannyy..IIwwiillllfifinnddoouuttwwhhaattppoolliittiiccaall,,eeccoonnoommiiccaall,,ssoocciiaallaanndd t teecchhnnoollooggiiccaallffaaccttoorrssaaffffeeccttiinnggtthheeccoommppaannyyaannddiittssddeemmaannddssiittuuaattiioonn.. 1.3 1.3LLiimmiittaattiioonnss T Thheebbiiggggeessttlliimmiittaattiioonnffoorrwwrriittiinnggtthhiissrreeppoorrttiissttiimmeeaannddtthheeppaaggeess t toowwrriittee..IIttiissaabbrrooaaddttooppiiccaannddiittccoouullddbbeebbeetttteerrpprreesseenntteeddiiff av avaaiillaabblleemmoorreettiimmeeaannddssppaacceettoowwrriitteeaabboouutt,,bbuuttssttiillllIIhhaavveettrriieedd t toohhiigghhlliigghhttssoommeemmaaiinnppooiinnttssrraaiisseedddduurriinnggmmyyfifinnddiinngg..MMyykknnoowwlleeddggee ab aboouutttthheeccoommppaannyy““SSiimmppllyyTTrraavveell””iissiinntteerrnneett--bbaasseeddaannddIIccoouullddnnoott ab ablleettooccoonnttaacctttthheeccoommppaannyyffoorrffuurrtthheerriinnffoorrmmaattiioonn..DDuueettootthheellaacckk ofi ofinnffoorrmmaattiioonnaabboouutttthheeccoommppaannyyIIwwiilllloonnllyyddeessccrriibbeeoonneeccoommppoonneennttooff t thheeSSeerrvviicceeMMaannaaggeemmeennttSSyysstteemm..IIwwiillllbbeeddeessccrriibbiinnggoonnllyytthheeOOTTppaarrtt of
of tthe he SSWWOOT T anaanallysiysis.s. 1.
1.4 4 MMetethodhodolologyogy B BeeiinnggiinnssppiirreeddffrroommtthheeSSeerrvviicceeMMaannaaggeemmeennttSSyysstteemmIIwwiillllddeessccrriibbeetthhee se serrvviicceeccoonncceeppttoofftthheeccoommppaannyy..IIwwiillllccoonndduuccttaaPP..EE..SS..TTaannaallyyssiissttoo fin finddoouutttthheeppoolliittiiccaall,,eeccoonnoommiiccaall,,ssoocciiaallaannddTTeecchhnnoollooggiiccaallffaaccttoorrss affe
analysistofindopportunitiesforthe “Simplytravel”infuture. 1.5 Data IwilluseSecondarydatacollectedfrom differentindustryreports availableoninternetformyreport.Dataprovidedinconducting P.E.S.Tanalysishasbeentakenfrom www.statistics.gov.uk. Chapter 2 2.1SimplyTravel’sServiceConcept[4] Establishedin1978,SimplyTravelhasbeenprovidingtravelsolutions since26yearsforthediscerningtravelswhowantmorefrom their holidaythanjustadecenttan.Notthroughtheaggressivemarketing tactics,butbyprovidinganattractivealternativetomass-market packageholidayshaslead“Simplytravel”togainabigloyaltypool amongtheholidaytravellers. “SimplyTravel”servesitscustomerswithwidevarietyofholidays includingdestinationslikeCroatia,Greece,Italy,Morocco,Portugal, SpainandTurkey. Servicesprovidedbythecompanyareintangiblebutstillphysical toolandequipmentsusedinoperationsaretangibleifthecustomer visitsthecompany’sfortheservices.Togetabetterunderstanding ofthe servicesprovidedby“SimplyTravel”Iwillsplittheservices intoCoreandPeripheralservices. Mentioningaboutthecoreservicesprovidedbythe,companyprovides hand-pickedpropertiestomeettheindividualneedsofitscustomers. Skiholidays,wintersun,Familyholidays(speciallocationsfor familyholidayswithchildcare)helpfulstaff,peaceofmindand safetyduringthewholetravelarethecoreservicesprovidedbythe company.
Unparalleledservice,lateavailability,nanniesforkids,pleasant experiencesforitscustomersaretheperipheralservicesprovidedby the company. 2.2 Service Package Servicepackageprovidedbythecompanyfordifferentholidaytravels includesallairporttaxes,flightsandtransfers,accommodation includingbreakfastandmealsandtheserviceofitsrepresentatives. Chapter 3 3.1 Customers HolidaymakingisthemainreasonthatUKresidentstravelabroad.As thecompanydealswiththebothinboundandoutboundtourism Iwill have a brief look on the inbound and outbound market. Number of overseasvisitsbyUKresidentsincreasedto59.3millionin 2002.Expendituresbythesevisitors,excluding internationalfares £27.07billion-slightlyhigherthanthe totalforthe domesticmarket (whichincludesfares). Describingaboutthedemographicsofthecustomers,mostofthe customersarefamilieswithchildrenandolderpeoplebutlatesttrend hasbeenseenintheyouthtotakeholidays. 3.1.1Customers’BuyingBehaviour Continuedconcernsoversafetyandsecuritywhiletravellingarefound
inthecustomersforholidaytravels.Touristsareincreasinglybuying experiencesratherthanausualroutineholiday.Theytrytofinda particularactivity.
ThefuelblockadesatU.Kpetrolstations,theeventsof11th
September 2001, the foot and mouth outbreak, SARS and Iraqi war has had continuous affect on the buying behaviour of UK market customers. Consumers are showing a continuing search for value for money from theirholidaychoices.Consumersexpectmorechoice,individualityand variety. 3.2Competitors Aggressivemarketingbylow costairlinesandinternetbooking agenciespresentabigchallengefortheholidaymarket.Airlineslike BritishAirwaysareofferingcustomerstomaketheirowntravelplans throughinternet.Travelagentscompeteinvarietyofwaysi.e.price, qualityandthepackageitself.Companiesofferspecialdiscounted packages and also compete on branding. As there are hundreds of travelagentsinthe U.Kmarketso,it’sdifficulttospecifythe competitorsinthemarket.Travelselect,Expedia,Travelocity,E bookers and Thomas cook etc. are the big names in the market and occupythebiggerpartofholidaysalesfortheU.Kcustomers. 3.3Market Icansaythatmarketisinastateofperfectcompetitionandno individualconsumerandtravelagentisinpositiontoaffectthe market. Keysuccessfactorsfor“SimplyTravel”are *Effectivelysegmentedandtargetedadventuretravellersmarket withinthelargertravelmarket. *Successfullypositionedastravelspecialists. *Personalinteraction,mediaandmarketing. *Repetitionofcustomers,Loyaltypool 3.4 PEST analysis
Toassessthemarketforthebusinessof“SimplyTravel”Iwill conductPESTanalysistofindoutaboutthePolitical,Economic, SocialandTechnologicalfactorsintheexternalmacro-environment. 3.4.1PoliticalFactors Politicalarenahasahugeinfluenceupontheregulationofbusinesses .Itincludesgovernmentregulationsandlegalissuesunderwhich businessesshouldoperate.
According tothefindings,politicalenvironmentofU.K.isquite stable. IssueslikeenlargementofEuropeanUnionandwaragainstterrorhave hadaneffectonthe politicalstabilityofthegovernment. Inresultofgrowingawarenessoftheenvironmentalconsequences,U.K Governmentisplanningactionstoensureaviationreflectsits environmentalimpacts.Proposalsareemergingforataxonaviation fuelandVAT on airtickets. Government’staxationpoliciesanddecisionabouttheincreasingthe
petrolpriceshaveaffectedthebuyingpoweroftheindividualsin U.K. ThepoliticaldecisionastowhetheraUKsignuptosingleEuropean currencyisagainhavinganeffectonthebusinesses. 3.4.2EconomicFactors Economicfactorsaffectthepurchasingpowerofpotentialcustomers andalsoaffecttheindividualcompany’sofferings.
U.Keconomyisbenefitingform graduallow inflationrate.Inflation rateInflationratefellto1.3% inFebruary2004. InU.K,unemploymentislow.Accordingtolabourmarketstatisticsin January2004felldownto4.8percent.Jobconfidenceishighand becauseofthisconfidencespendingbyconsumerisalsohigh. PredictionspointtocontinuingGDPgrowthovertheperiodaveraging around2.4% ayear(GDProseby0.9% infourthquarterof2003),with realhouseholddisposableincomerisingatasomewhatfasterrate. Householdexpendituresroseto0.9percentwiththeincreasein disposableincome. TheUK’sdeficitontradeingoodsandservicesinFebruary2004stood at£3.2billion–comparedwiththereviseddeficitforJanuaryof£4.4 billion.
Continued sales growth has been observed during the past few months in the UK economy. ExchangeratesarefavourableforUKresidentsfortravellingabroad duetostrongposition ofBritishPoundagainstthe otherforeign currencies.“Euro”usedasasinglecurrencyinmanyEuropean countries,isalsostableagainsttheotherforeigncurrencies. LatestpredictionsfortheUKeconomysuggestthatitwillremainone ofthestrongesteconomiesintheworldoverthenextfiveyears,with low inflation(inflationfellto1.3% duringFebruary2004),low unemployment and reasonable economic growth.
Thedownsideisthatdisparitiesbetweenthewealthierpartsofthe country,notallinthesoutheastofEngland,andpocketsof deprivation,willgetwider,withimplicationsfortraveldemand. ThesearelikelytoinfluencethegrowthoftheUKresidenttravel market. 3.4.3SocialFactors Atrendofgettinginternetaccessathomeandbuyingonlineis developingintheUK.AccordingtostatisticsinSeptember2003,11.9 millionhouseholdsonlinewererecorded. ListeningtomusicorradioisapopularchoiceamongtheUK residents.92% ofpeoplecontenttospendtheireveningsandweekends watchingTVorhiredvideos.Tosocialize,mostpeoplethinkto entertainfamilyandfriendsathomeratherthangoingout(79%). AgreattrendhasbeenseeninU.Kpopulationaboutdietandhealth issuesintherecentyears.Thistrendleadstowardstheneedofmore fitnessclubsandorganicfoodforthepeoplefrom U.KChangesinthe structureofthepopulationbecauseoftheimmigrantsfrom Europe, AsiaandAfricaetc.willalsoaffectthesupplyanddemandsofgoods withintheU.Keconomy.
Continuedconcernsoversafetyandsecuritywhiletravellingarefound intheU.K residents. LifestylechangeshavealsobeenaffectingtheU.Ktravelmarketfora numberofyears.Postponingthestartofthefamilyandanincreasein thenumberofhouseholdsconsistingofcoupleswithtwoincomesare themaintrendstowardthechanginglifestyle.Changingfashions, whicharedifficulttopredictalsohaveanaffectonthemarket. 3.4.4TechnologicalFactors TherapiddevelopmentoftechnologyisaffectingthebusinessesinUK andallovertheworld.Changesinthetechnologyhavechangedtheway businessesoperatei.e.Internetbooking forticketsandholidays. Fasterchangingdevelopmentintechnologycreatesaneedtoreact quicklyfordifferentbusinessesinordertheywanttomaintainthe competitiveenvironmentbyprovidingthesameinnovativeservices, whichtheircompetitorsareoffering.
Distributionofproductsbytheuseoftechnologiese.g.marketing
information systems, customer relationship management are also common practiceswithdifferentbusinessesforeffectiveservicestotheir
customers. Chapter 4
4.1Impactsondemandsituation
Findings from the PEST analysis will enable me to comment on the impactsonthedemandsituationofthecustomersofthe“Simply Travel”.
Elasticities
Changes in the quantity demanded due to change in price and income are veryimportantforthetourism industry.Risingdisposableincome amongtheUKresidentsisthepositiveindicationforthe“Simply Travel”thatpeoplewillhaveenoughmoneytobuycompany’sproducts. However,Government’sfiscalpoliciesfortaxonaviationfuelandVAT onairticketswillimpactthecompany’ssupplyofservicesatthe samerate.Higherpricesofthetourpackageswillleadtolesser demand among the UK residents.
Cross-PriceElasticities NotonlyapricechangeintheUKduetotaxesisimportantbutalso thepriceofthefacilitiesinotherdestinationswherecompanyserves isalsoimportant.ForexamplerisingpricesinItaly,Spainetc.for differenttourism relatedproductswillalsomakesupplyofproducts expensiveforthetourists. Trends Latesttrendsofhome-entertainmentandmoreawarenessaboutthediet and health-issues does also have an impact on the demand of the tourist.CompanywillhavetocompiletheSuppliesofservices packageswithvarietyoffacilitiesavailableaccording to individual’schoice,soitcanmakesupplyoftheproductsabit expensiveforthecustomers.
Purchasing method
thedemandsituation.Buyingthepackagedirectfrom suppliersi.e. Hotels,airlineswilldecreasethedemandofthe tourists. Moreover,low inflationrateandhighemploymentrateandfavourable exchangeratewillincreasethebuyingpowerofthetouristssoit willincreasethedemandinBritishholidaytravellersfortheholiday travelsabroad. 4.2OTanalysis Tofindopportunitiesandthreatsfrom theexternalenvironmentfor the“SimplyTravel”,IwillconducttheOTanalysis. 4.2.1Opportunities Opportunitiesexistfor“SimplyTravel”inexpandingtheservice packageaccordingtothelatesttrendssuchas *PackageswithindividualconcernedDietandhealthmatters *Addingparticularactivitiesforthetourists,providing experiences *Providing morechoice,individualityandvariety. Andprovidingtherealvalueforthemoneyofthetourists. 4.2.1Threats Cheap airlinesaddingfacilitiesforthetravellerstomaketheirown travelplanisthebiggestthreatforthecompany. Government’sdecisiontoaddtaxesonaviationfuelandVAT forair linesarealsoamainthreatforthecompany. Latesttrendsofhomeentertainmenti.e.listeningradio,watchingTV, Invitingfamilyandfriendsarealsothreateningthecompany. Terroristattackslike9/11isalsoabigthreatforthecompany. Chapter 5 Conclusion IconcludemyreportbysayingthattheHolidayTravelmarketinUKis inastateofperfectcompetition.Thoughtherearepositivesignsin theeconomyforpresentandnearfutureandbuyingpowerofthe individualsisincreasingdaybydaybutstill“SimplyTravel“isin
