Key Issues in the Business Environment
The travel and leisure industry is one amongst other sectors which have undergone drastic large-scale changes. This change is due to several emerging issues in the industry causing them to change and adapt in the current prevailing environmental conditions. Therefore, these aspects affect the business operations of travel and leisure industry and also has an impact on its profitability (Anheiser, 2011).
Advancement of technology
This is one of the main issues that has transformed the travel and leisure industry and has helped in improving the quality of their services (Hjalager, 2002, pp. 465-474). With technology advancement, travel and leisure industry have developed a facility which allows advanced booking reservation whereby, customers can book rooms and travelling tickets earlier enough. Technology has also enabled the travel and leisure industry to provide efficient and quality services to their customers thus allowing them to gain customers loyalty (Sharp, 199, pp. 4-10). The use of social media platforms has also made marketing of travel and leisure industry to be easier because, the industry can marketing customers can access the destinations through social media and plan to visit those places (Kourteli, 2000, pp. 406 – 413).
In the case of political instability, this could affect the business of travel and leisure industry. Another political factor affecting the industry is interference from the politicians. Politicians often have an enormous influence on businesses and can dictate how the business will operate and whether it will continue being operational. Most of the politicians who may interfere with the industry are the ones who may have an interest in the industry if the industry does not cooperate, they may do anything in their power to make the sector fail (Gao, Huang, Huang, 2009, pp. 439–450).
There are often legal policies that have been set by the government upon the travel and leisure which they must abide by them. The legal policies set for travel and leisure industry includes ensuring proper security, payment of taxes, maintained the required hygienic and cleanness standards (Williamson, 2003, pp.20 – 21). The legal restrictions are the major obstacles that travel and leisure industry faces because, in case of non-compliance with the legal limits, these could lead to fines or the closure of the business. The legal documents always ensure that the business is run is legal and aides by the law. However, there are circumstances whereby, the legal restrictions may be put on the travel and leisure industry with the aim of preventing the sector from impacting the environment negatively.
The leisure and travel industry is guided by the requirements of leisure and travelling which is governed by interrelated laws. Travel and leisure industry is also highly supported by the measures of the European Union which thus encourages its development. The legal conditions that are ideal for leisure and travel industry development comprise of a well-functioning legal system that enables it to grow in the market with fewer problems (Dale and Beyeler, 2010, pp. 3-10).
Due to an increase in ecological problems, the natural environment has become a crucial element for the travel and leisure industry (De Freitas, 2003, pp. 48, 45–54). The industry is now embracing the utilisation of natural resources, adherence to measures that protect the environment together with climatic conditions. In travel and leisure industry, quality of drinking water, air quality, management of waste, richness of biodiversity and natural disasters are crucial elements for its development (Sinkiene, 2008, pp. 68-83).
Key Macro Issues in the Travel and Leisure Industry
Sinkiene (2008, pp. 68-83) explained that examining the social factors comprises of demographic changes in the region or country, community and family relationships existing in the society, lifestyle characteristics, education and health aspects among others. In the travel and leisure industry, it often receives a large number of different customers as it always offers a variety of activities suitable for every category of individuals in the society ranging from children to the adults. However, most of the age group who have retired do not love much travelling and leisure activities thus being a disadvantage to the industry. Moreover, when you look at rural areas, the demographic situation of this area is very poor, and it is hard to get qualified staff here and people willing to use leisure facilities making it hard to put a leisure facility in the rural.
Development of travel and leisure industry in rural is also hindered by poor infrastructure, insufficient access to education and health services and high unemployment rate. Culture is also another factor affecting travel and leisure industry. Some cultures do not have restrictions when it comes to leisure activities while others have limits. For instance, some cultures require separation of cultural facilities for both genders while others do not. Therefore, this puts pressure on the travel and leisure industry to create facilities for different, and those who may not meet these requirements end up losing the customers believing in that particular culture.
For leisure and travel industry to develop, the growth of revenue is significant (Snieska, Barkauskiene and Barkausas, 2014, pp. 280-285). When there is an increase in people’s wages, they will spend more on travelling and leisure thus increasing the industry’s revenue. On the other hand, unemployment rates and low income paid to individuals reduces their spending on travelling and leisure. This is because, they will concentrate more on using the little they have for their basic needs thus being a disadvantage to the industry (Ian, Chris and Ed, 2018).
Besides that, since a high percentage of people are not rich but are either earning low income or are in middle class, it is necessary for the industry to adjust its prices to ensure that, the prices they offer are fair enough and can be afforded by all customers no matter the financial position of the customer. These fair prices, will give the industry a high probability of getting many customers as people of different status can afford it.
Profitability
The key issues could affect the industry profitability and the revenue that the industry gets. For instance, when there is political instability, natural disasters and poor economic conditions, the industry will not be able to generate more revenue. This is because these issues will affect the operation of the business and make it get losses. Additionally, poor climatic conditions will prevent customers from travelling for leisure, and most of them will opt to wait for the environmental conditions to improve as most leisure activities go hand in hand with a pleasant climate (Sloman and Jones, 2017).
Advancement of Technology
When the external conditions are favourable, the travel and leisure industry will be able to operate very well and ensure that it provides quality services. Since they will have met all legal conditions required by the law, their business will be acceptable, and they will focus on ensuring they offer services that satisfy the requirements of their customers, and at the end, customers will be attracted to the industry, and they will earn more revenue.
Once the industry has been able to satisfy the needs of its customers, more customers will be attracted to this industry. Moreover, since the industry will be providing quality services which meet the requirements of its customers, the company will gain customer loyalty and retain most of its customers thus enabling them to get good returns throughout the year. This will allow the industry to continue growing and increase its revenue. With all this, it can increase the amount of the services it offers and be able to reach more customers (Tosun, 2015, pp. 231-253).
The good macro environment also motivates the employees of the industry. With the good macro environment, the business environment of travel and leisure industry will be earning profit which will enable them to treat its employees well, paying them better salaries and also give them bonuses. These will motivate the employees and will allow them to work harder and increase the profitability of the industry (Chen and Mohamed, 2008, pp. 61-81).
When the external conditions are favourable, the industry will be in a position to express itself better to the world and through that, it will gain a competitive advantage over their competitors. This will also enable the company to prevail in any competitive environment, and through this, the company will be able to maintain the profit that it earned. Additionally, with a competitive advantage, the industry will be able to retain its customers, improve their services quality and increase customer loyalty (Zdorov, 2004, p.272).
Macro factors like technology will help in easing the industry’s service delivery as it enables it to be efficient. Advancement of technology will allow the travel and leisure industry to develop facilities which would allow for advanced booking reservation whereby, customers can book rooms and travelling tickets earlier enough. Therefore, this will ensure that the delivery of services is done within a short time and more customers will be served within a short time (Sharp, 199, pp. 4-10).
When the customers are satisfied with the services being offered by the industry, the company will gain customers loyalty and more customers will also be attracted to the services being provided in the industry and come in large numbers. Moreover, the existing customers will also pass the message to other customers and refer them to the products of this company enabling the industry to increase its revenue and develop a strong brand name among its customer (Barron, P., 2008, pp. 730-742).
Privacy issues
Use of social media may expose the privacy information of the industry. An example is the use of modern technology like the use of media in advertising and marketing. Through this, the industry’s private information may end up landing in wrong hands. This is because people may hack the industry’s private information and use it to ruin the company. Competitors may also use the private information of the industry to find ways of outcompeting them, and this will be very unhealthy for the industry. Therefore, it is essential for the industry to keep their private information away from social media and protect it against their competitor.
Political Factors
It is costly in incorporating the new technology in the travel and leisure industry. For instance, it is very expensive for the company to develop an online system that can serve all customers without downtime. Therefore, the company has to take part of its profit to use in hiring experts to create the system that will be used in the industry. With this, the revenue of the industry is affected, and the industry will have to cut down on other costs to ensure it can incorporate the new technology. However, when it is operational, it will earn the company good returns and enable it to recover the incurred costs (Capon, 2009).
System breakdown might occur due to the use of new technology, and this may cause disturbances and slow down activities of the industry. An example is a slow network that may cause the system to hang and prevent activities from running smoothly (Riege and Perry, 2000, pp.1290 – 1305).
For instance, clients may give wrong details of their specifications, and this may make it difficult in delivering the services to the right person just due to the incorrect information provided by the customer without realising.
Conclusion
In conclusion, the macro environment of the industry is an important component and can immensely affect the travel and leisure industry. The favourable macro environment will have a positive impact on the sector will unfavourable macro environment will have a negative influence on the industry. Therefore, it is crucial for the industry to draw its attention on the macro environment as they determine the industry growth.
These factors will increase the industry’s revenue and profitability. However, technological factors are too costly and will require the industry to strive hard to ensure it utilises modernized technology so as to remains relevant to its competitors, customers in this digital society. Additionally, while using social media, privacy of the industry should be uphold. Therefore, the industry must be very cautious while giving out information online to avoid disclosing confidential information which might jeopardise their industry.
References
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