Example Of Continued Impact On The Tourism Industry Resulting From The Global Economic Slowdown Essay
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In a time of economic crisis taking its strength in the world, leading countries its impact on a tourism industry is inevitable. People start saving money expecting the worsening of economic situation thus decreasing their spending on tourist activities. Increasing prices also have negative influence on the development of tourism.
According to Kapiki (2012, p. 20) global economic crisis that started in 2007 had badly affected tourism industry. Its effect on purchasing power, loss of market confidence and withdrawal of investment funds led to tourism industry crisis. But in the following years situation changed and tourist activities showed slight increase. This changes also led to strengthening of such supplementary industries as hospitality.
In 2014 the euro zone crisis and general disorder in the international arena invoked negative trends in tourism. Slowdown and recession in the economies of major world players caused precedents of falling revenues, rising costs and exchange rate fluctuations. These inner and external threats had led to stagnation on tourism. These trends also involve harmful influence on hospitality and other events. As we know those countries which used to take the lead in the list of the most popular travel destinations, such as Old Europe and the US, suffered from this financial crisis more than their Asian partners. That is why it provoked great shifts in tourism industry absolutely changing its fundamentals. Asia and Pacific region as the fastest growing region gained its popularity as tourists' favorite places.
Moreover, political conflicts and general instability also affect tourism industry of particular country, first of all its economic capability to develop tourism. Investors' unwillingness to invest money into this industry caused by political reasons may lead to severe decline for many years to come.
But some countries manage to keep their best performance in terms of tourism even while economy of the world is slowing down. These countries have succeeded to find and develop in a very short time such services and supplementary inventions that attract tourist even during crisis. Thus according to the issue of the UNWTO World Tourism Barometer, during the first eight months of 2014 international tourist activities grew by 5%. The most popular season remains of June to August while the most popular destinations are Americas, Asia and Pacific region.
Despite all pessimistic projections that appear when we speak about global disorder, Fair (2013) suggested several trends that mostly had place in 2014. For example, China surpassed the US and Germany and become one of the leading countries with outbound travelers. At the same time Asia became very popular destination for travelers around the globe leaving only four non-Asian cities in the Top-20 list (Paris, New York, Rome and London). South America demonstrated decline in intentions to travel due to rising expenditures. The Leader in this region remains Brazil. America remains leading destination for tourists and a country with largest number of tourists while Europe suffers inconveniences due to euro zone problems. Nevertheless in the European Tourism and Prospects in 2014: Trends and Prospects it is mentioned that “the majority of European destinations reporting tourism data through TourMIS for the first five months of 2014 show continued growth in international arrivals and overnights. 20 of the 22 reporting countries have recorded growth for the year to date”.
Hospitality industry can not be avoided in this context. There two challenges that affect it most are economic recession and globalization. If globalization causes mainly positive changes toward the development and innovations for better service, economic recession hits hospitality very much. Thus while in 2014 the world suffered from numerous events that let to financial and economic instability, hotels and resorts felt these problems very deep. Hospitality is pretty much connected with tourism and as it develops and grows, this industry must follow it too. But absence of investments or unhealthy economic conditions may prevent it from growing that may cause supply crisis. The Ernst & Young experts mentioned that “following years of a slow and stubborn recovery, the global hospitality sector entered 2013 with a strong appetite for growth». But such challenges as rising debts and government invasions, constrained European capital markets and threat of worsening political conflicts prevented better performance of hospitality industry across the world in 2014.
Despite the total instability in the world starting from military conflicts to inability to make prognosis regarding economic situation, the United Nations World Tourism Organization in its projection Tourism Toward 2030 states growth of tourism industry, but “at a more moderate pace”. Transportation cost continue rising but it will not prevent the increase in international tourist arrivals. The number of interregional arrivals will continue to outnumber intraregional. In 2015 the emerging countries destinations are expected to surpass advanced economies destinations in the international arrivals. But still the number of received tourists in the emerging economies will be much lower than needed taking into account their population. Asia and Pacific region is expected to receive the largest number of tourists while the South Asia will become the fastest growing region in international arrivals. Future arrivals are believed to be more evenly spread over new and old destinations. Outbound tourism will remain the highest in Europe and still too low in Asia and Pacific.
Still the experts presuppose that such perspectives may be sharply influences by different factors and thus they have wide range of scenarios in case of any change in economic conditions. With oil price falling, the transportation costs are expected to decrease which will lead to international arrivals growth by 3.9% per year. If the stagnation in Europe and slowdown in the world economy still remain in force, international arrivals will show far less rapid growth.
Despite some negative trends tourism was and will be very popular activity. In a time of crisis people save money but 2014 year showed that they are ready to spent on traveling. Hospitality industry as one that supports tourism is now being developed too especially in regions where tourism has found its demand. European and American investors are interested in building and developing infrastructure of South Asia, China and Pacific region as the fastest growing in international arrivals. This may lead to general economic growth of this region.
Speaking about latest trends it is also important to mention that such activity as medical tourism will have its effect on the development of both dependable industries – medicine and tourism. With medical tourism being comparatively new phenomenon, it will gain more popularity. For example, China's and Russia's markets will continue to be considered as large growing markets for medical tourism but in the light of sanctions and difficult economic situation the expected estimated performance may not be achieved by the countries. Other destinations of medical tourists will remain the same but the most obvious trend is that every country now tries to develop its own medical industry, thus it must not be a surprise if the popularity of such kind of tourism will soon decline.
2015-2020 trends in tourism are unpredictable. Basing on some common trends and data year-to-year it is possible to estimate average growth of this industry but it is impossible to project every change and force majeure. Thus experts have some different scenarios of possible sequence of events and they depend on basic economic fundamentals: GDP, employment and fuel prices. According to latest estimation tourism growth will be at 2% annually. This makes possible development of hospitality and other supplementary industries possible and profitable.
Belfast City Council, 2014. Belfast Integrated Tourism Strategy 2015-2020. [pdf] Belfast City Council. Available at: <https://minutes3.belfastcity.gov.uk/documents/s927/Tourism%20Strategy%20-%20LT%20version%20211114.pdf> [Accessed 21 November 2014].
Ernst & Young, 2013. World Hospitality Insights. Top Thoughts for 2014. [pdf] Ernst & Young. Available at: <http://www.ey.com/Publication/vwLUAssets/EY_-_Global_hospitality_insights_2014/$FILE/EY-Global-hospitality-insights-2014.pdf> [Accessed 25 September 2013].
European Travel Commission, 2014. European Tourism 2014 – Trends & Prospects (Q2/2014). [pdf] European Travel Commission. Available at: <http://etc-corporate.org/?page=report&report_id=57&subject=trends_watch&theme=reports> [Accessed July 2014].
Fair, Ch., 2013. 2014 Trends in Travel &Tourism. [online] Resonance Consultancy. Available at: <http://www.slideshare.net/chrisfair/2014-travel-tourism-trends-28171651> [Accessed 12 November 2013].
Kapiki. S., 2012. The Impact of Economic Crisis On Tourism and Hospitality: Results from a Study in Greece. Central European Review of Economics and Finance, Vol. 2. No 1, pp. 19-33.
World Tourism Organization, 2014. The UNWTO World Tourism Baromrter. [pdf] World Tourism Organization. Available at: <http://tourlib.net/wto/UNWTO_Barometer_2014_05.pdf> [Accessed October 2014].
World Tourism Organization, 2010. Tourism Toward 2030/Global Overview. [pdf] World Tourism Organization. Available at: <http://ictur.sectur.gob.mx/descargas/Publicaciones/Boletin/cedoc2012/cedoc2011/unwto2030.pdf> [Accessed 10 October 2010].
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