Consolidation in the Tour Operator Industry Case Study

Consolidation in the Tour Operator Industry - Case Study Example Visit Britain expects tourism to grow into a ?113bn industry if managed properly. However, despite tourism funding by the government being doubled since 1997, there is a threat that the UK tourism sector could slip behind international competitors. Economic Environment The tour operators’ industry has faced both economic and structural challenges over the past five years and through 2013-14 (Ithe BIS World, October 2013). Industry revenues have been as a result of economic downturn, lower disposable incomes, and reduced consumer confidence, due to which domestic tourists seek cheaper destinations. Tour operators’ revenues in 2008 show an increase over 2005 – from â‚ ¬60bn to â‚ ¬84bn (Appendix B) but this could also be, due to rise in tour prices, a rise in airfares and hotel charges. Therefore, loss of consumer confidence and declining incomes is a threat to the sector. ... Consumers demand value for money and consumers seeking mind prefer package aged holidays (Euromonitor International, 2013). Tour operators now offer flexible, dynamic packages but credit crunch impacts tourism as well. Consumers have responded to the credit the unch by choosing to holiday within the UK which has led to the trend of ‘staycation’ (Williams, 2008). Staycation holidays have increased by 13% and outbound travel decreased by 18% (Stamford, 2009a) which suggests that staycation and packaged holidays provide an opportunity to tour operators to redesign their product offerings. Technological Environment Technology has empowered the consumer in many ways. Low-cost airlines have made holidays more affordable; in addition, are the high-speed train networks. Internet penetration provides an additional distribution channel. Technology enables access to consumer data which facilitates tailoring their offerings to consumers. Mobile, technology and social networking have further empowered the consumer in seeking information, comparing and reading reviews about service providers before booking their holiday. This has helped major tour operators such as TUI to target specific segments through the strategy of differentiation. Technology thus is an opportunity to exploit the sector. Environment Tourism is generally associated with environmental degradation and ecological imbalance. The region is negatively impacted when the level of tourists exceeds the environment’s ability to cope with the use (UNEP, n.d.). In addition, natural resources are depleted; land area is reduced as infrastructure development takes place. Local resources are also used up by tourists thereby impacting the lives of the local people.