The Analysis of the UK Travel Industry Essay Sample

The travel industry is socially-oriented area of activity. Its effectiveness is determined by the indicators of consumer activity. It is also measured by a variety of ways to meet customer needs during the travel. Tourism is defined as an activity that exposes certain market requirements to commercial companies.

Certain economic conditions force the companies to change their behaviour in the market. The development of a marketing strategy should include particular elements that would contribute to long-term relationships between clients and companies. However, not all economic agents shift their marketing focus to consumer needs, which contributes to functioning of the tourism industry. As the experience of ABTA shows, the focus on consumer needs is supposed to be the most important factor in the successful business performance.

The Analysis of the UK Travel Industry and Its Key Player

The UK travel industry is characterized by sluggish development. The UK companies forecasted that the growth of tourism sector would be one of the most rapid in the subsequent years. They indicated that the annual growth for value added would increase by more than 3% (PWC n.d.). The forecast ensures a successful growth of this dynamic industry, which will be able to outpace the increasing rate of the development in retail, communications and transport sectors. Such positive projections are confirmed by the leading position of the UK in rankings of the most popular tourist destinations.

The UK travel industry includes various directions of activity and reveals its developed structure. This sphere consists of the domestic, inbound, and outbound tourism. Trip distribution may vary based on transport type, destination, country, purpose of visit, costs spending, residents, attractions, accommodation, etc. These aspects of the industry help form the vision about its structural characteristics, infrastructure development, business relationship peculiarities, and travel preferences. They also predetermine the specifics of supply and demand of tourism products and create prospects for the development of activities within the same industry.

The UK travel and tourism industries are flexible. They are able to adapt to changes both in general economic scope and at the national level. Certainly, the nature of its development depends on social trends, tourism market environment, economic factors’ impact, tourism products service provision, communication, as well as other economic industries’ development not only in the UK, but also in other countries, especially neighbouring ones.

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Important factors, which influence the development of the British tourist traffic, are the progress of modern technology and online tools, as well as globalization. According to Google, significant part of operations aimed to promote the global tourism industry are carried out online. Thus, decisions of travellers from the UK to purchase the tour are determined by means of online technologies (PWC n.d.). Such progressive use of communication tools has had significant influence on the development of modern technology, stimulating the travel industry growth. The digital factor should be considered to promote specific tourism products or activate consumer attention to the particular type of tourism.

Another factor that influences the travel business development is the dynamics of companies that refer to the general supply chain of the tourist services. For example, improvement of living conditions, sheltered rent of the tourist transport, and available price discounts for the travel during the tourist season would have a positive impact on the increase of the UK tourists’ interest. In addition, it will have positive effect on the travel demand increase, employment growth in the sector, as well as the upsurge in total volume of the domestic and foreign investments due to improvement of social and economic relations.

The country has all peculiarities necessary for the modern travel industry. Hereby, in comparison with other European countries, the international tourism of the UK was developing more rapidly even two centuries ago. The main factors of its prosperous formation were higher level of economic development and living conditions, rapid urbanization, establishment of annual leave for employees, development of educational programs and transport infrastructure, excellent communication links with European neighbours, etc. This situation has stimulated the outbound tourism, but has also formed some inbound tourist flows.

The UK Domestic Tourism

The domestic tourism remains predominant. Rough climate is not an obstacle for both domestic and inbound tourism. Nevertheless, socio-economic benefits developed by the travel industry are the powerful network of transport roads, high travel initiative of the economically active population, developed tourist attractions, a high proportion of landscaped areas, etc.
Most of the UK residents use cars for the domestic tourism, while others choose buses and/or trains. Trucks and motorhomes’ usage is also widespread. As for the hospitality sphere, the tourists prefer to choose so-called inns rather than hotels, as well as boarding houses, tourist bases, rooms from farmers, or other cheap residences. This indicates the desire of tourists to save money on a residence permit, but not on the opportunity to travel to both the UK and other countries.

The UK Inbound Tourism

The UK inbound tourism is characterized by the arrival of tourist flows, mainly from Europe than from other parts of the world. It is noteworthy that Europeans spend less than tourists from more distant and larger countries. Such notion is also applied to the duration of the trip. If tourists from Europe stay in any part of the United Kingdom for a short term, then travellers from China or the Middle East spend more time within the country and supply the local budget with larger amounts of money.

The most frequent visitors are the residents of France, Germany, the United States, Ireland, the Netherlands, Spain, Italy, and other nearby countries. Despite this, the largest amount of expenditures is typical of the visitors from the United States, Australia, and other countries, which are not geographically close to the UK. The successful long-term and short-term tourist relationships have been manifested in recent years with respect to European countries and the United States. It promotes the formation of many joint tourism projects, taking into account the influence of these countries on the global economic development and the scope of their own travels.

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The development of this sector of the economy contributes to the rapid development of the country. Thus, according to the results of 2013, the total spending in this sector has reached £ 113 billion, which is 6% higher than in the previous year (Euromonitor International 2014). The tourism development has helped employ 173 thousand people (Euromonitor International 2014). The total number of jobs created in tourism sector amounted to 9.6% within the whole industry. The contribution of the travel industry to the country’s GDP was 9% in 2013 (Euromonitor International 2014).

The number of outbound trips taken by the UK residents significantly reduced even in comparison to the period of the British economy recession that happened due to the decline in net income in 2013. As for the domestic trips, their number was not as much affected by the recession, displaying almost the same rate with an imperceptible decline (Euromonitor International 2014).
In terms of the UK regions, the largest tourist activity according to the amount of expenses was showed by England (47%), Scotland (18%), and the Northern Ireland (15%) (Euromonitor International 2014). Geographical distribution of employment in travel sector in 2013 was as follows: 1.875 million jobs were occupied in England, including 37% in London; 292,000 – in Scotland, 206,000 – in Wales, and 43, 000 – in the Northern Ireland (Euromonitor International 2014). Such situation occurred due to territorial, economic, and demographic peculiarities of the regions. Thus, each part of the UK has been secured by sufficient human resource capacity to achieve positive economic results in the field of travel and recreation.

The increased level of employment in the travel industry has also affected occupation rate in the related sectors. By 2012, the employment rate has increased in the field of information and communication technologies, as well as in the finance and insurance sector, boosting the overall economy. In comparison with the low productivity of labour in 2008, this indicator has increased gradually due to the crisis of 2009-2010 (Euromonitor International 2014). However, the increase in labour productivity at the annual rate is expected to be 2% higher in 2020 (Euromonitor International 2014). This will ensure the growth of labour productivity in other sectors that relate to the tourism industry.

In February 2015, foreign tourists have spent £ 96,3 million, which is 19% less than in the previous year (Euromonitor International 2014). More than 2 million people attended the country, that is 5% less than in 2014. The visits from European countries to the UK became more expensive than travels from the United States due to the major factors that influence tourism development (the rate of sterling against euro and dollar). Therefore, inbound tourist flows from the neighbouring countries of the same region decreased by 12%; however, inbound tourism from the United States increased by 13% (Euromonitor International 2014).

There were some changes in the structure of the target travel. The beginning of 2015 was marked by the 9% decline in the number of trips for the purpose of rest and recreation. The number of trips to the UK with the aim to visit relatives and friends (VFR) has also decreased by 5% in comparison to the previous year. The number of business trips has fallen by 8%. However, over the last three months, this ratio showed a 7% increase due to the slow recovery of the business processes after the economic recession (Euromonitor International 2014).

The UK Outbound Tourism

The outbound tourism statistics is somewhat different. During the period from December 2014 until February 2015, the tourist activity included more than 10.5 million residents of the UK, who left the country for tourism purposes (Euromonitor International 2014). The total cost of travelling for the same period has reached £ 6 billion, which engulfed only 94% of the same period last year. Holiday visits have increased over this period by 3% and VFR indicated improvement by 6%, but the amount of business trips decreased by 19%. The preferred destination was the United States rather than Europe. Its contributing factors were the increase in utilization of transport infrastructure, measures implemented by the European Bank to reduce deflation, and the recovery of the differences in exchange rate.

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The indicators of the tourism inside the UK in February 2015 showed that the number of daily visits within the country was 323 million, which is 7% lower than in the previous year (TNS 2015). This creates some difficulties for promotion and development of the domestic tourism. However, this trend may change in view of improvement of certain tourist activities and general interest of the population in tourism.

The alleged and farsighted perspectives of the travel industry in 2025 are focused on the increase in the international demand by 6%, the outbound tourism – by 1.5%, and the domestic tourism – by 3%. Similarly, the forecast figures have been increased from 9% to 13% of the UK GDP value (Doloitte 2013). By 2025, the role of the travel industry in the economy is estimated to be £ 324 billion of value added, which is a significant part for one economic segment.

The significant meaning of the predicted figures of the travel development reveals the ratio of exchange rates with the countries supplying and accepting the tourism flows, expenditures, general national and international economic situation, attraction destinations, and investments (Doloitte 2013). If these figures and events continue to improve, their dynamics will be the cause for heralding the imminent increase in the number of long journeys.

The anticipated visitors can come from Asia-Pacific region. Despite a significant and apparent increase in the steady inbound tourism from Europe and the United States, the travellers from the mentioned regions of the world will positively influence the slow growth of tourism demand in the UK. Such changes will lead to the improvement of socio-economic relations of the UK with these countries. Continuing to attract consumers with the developed habit to spend much money, the UK, particularly London, will receive additional benefits from it.

The level of international competition should be taken into account, while developing the ways to improve the UK tourism industry. The climate characteristics of other countries may be their competitive advantage, while the UK has more stringent climate and changeable weather., There are many alternative leisure options for the consumer among different European countries. The obvious fact is that to strengthen and enhance the importance of the UK tourism market, additional investments are needed. Moreover, information support and active marketing efforts of tourism companies are equally necessary.

Marketing strategies of the UK travel market players involve creation of the specific programs that enhance the interest in the country. The common features that unite the goals of the companies to promote tourism services are focused on consumer preferences’ satisfaction. Tourism personalization, which started to appear during the development and spread of information and communication technologies, has marked the beginning of the marketing behaviour changes of the travel sector players (Collins). It has contributed to the creation and promotion of their own websites. Moreover, online features have significantly enhanced the credibility of this tool to promote the business. To regulate relations with the consumers, the companies direct their efforts to CRM implementation, as they have to work with large volumes of data and an extensive customer base. Modern marketing strategies are characterized by their focus on mastering information technologies, which gives significant competitive advantage against high information competence background of tourists.

Another common trend of the marketing strategies of the companies that operate in the travel sector is manifestation of the advanced features to their consumers. It can be shown through advertising of booking capacity, possibility to obtain the detailed information about a peculiar destination, and expansion of tourism opportunities directly to the place of the tour consumption. The companies, which are the main service providers, try to ensure customers that any convenience can be provided to meet their needs. Such information is the marketing ploy to attract customer attention and develop a brand trust.

The additional marketing strategy, which is characteristic of many British travel companies, is differentiation of services. Such behaviour is typical for those entities, which are aimed to provide a variety of tours without paying the customers’ attention to the price. It is done in order to ensure the company’s long-term competitive advantage and innovative image, as well as customer loyalty and satisfaction of the needs of different consumers. This becomes especially important due to the variety of travel destinations for the British tourists (García, & Tugores, 2013).

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However, along with similar marketing strategies, competitors in the UK tourist market have some discrepancies in their behaviour. There are players in the travel market, who know that the most promising strategy is the one that is focused on the maintenance of any tourist taste. Therefore, their behaviour largely depends on the market conditions and flexibility to respond to the market changes. They constantly perform the activities, which involve conducting the market researches and improving their products in accordance with consumer preferences. Other companies can proclaim the same policy, but their strategic marketing priorities would be aimed at the market expansion and competition decrease, etc.

The UK travel industry shows the activity of travel associations and various enterprises, such as ABTA (ABTA n.d.). This association brings together the efforts of its both travel agents and operators. Its total turnover is more than £ 30 billion per year. The role of the travel company is to organize and sell high quality tours, differed by the information support of the clients from the beginning of the consultation to the full implementation of the tour. Every tour operator of ABTA provides such services, and the travel agent gives a possibility to buy the ready tour package with the relevant services. The ABTA brand acknowledges support, protection, and expertise as the functional indigenous values of the company, which uses them to meet travel needs of the consumers and form the basis of its marketing strategy.

The prerequisite for creation of reliable and trustworthy relationship with consumers is a promise to resolve any issues related to the tourism services provision regardless of the company’s staff. In such a way, ABTA demonstrates confidence not only in the ability to correct the defects of work, but in high quality skills and competence of the employees. In addition, the company is able to support the consumers owing to a helpline. It greatly facilitates the ability to give the immediate assistance to the clients.

Not every company mentions about the protection and patronage of its client, but it is important for tourism enterprises as they send people to another country, or other location that is associated with a number of downside risks. Nevertheless, ABTA enlists the code of conduct developed by the company. It is comprised of the standardized services, financial support, and a money-back guarantee in case of a sudden business withdrawal. It also involves financial protection schemes during the booking of the tour order, including transfer and accommodation.
The expertise function of the marketing strategy is displayed in the services of the company’s employees, which are responsible to provide the clients with information and consultations. The employees’ professionalism determines how potential customer will perceive the company’s performance, whether expectations about the service and a quality of the tourism product will be satisfied, etc. Since the company provides twenty-four-hour expert support, it not only helps determine the course of their own behaviour in these cases, but it also plays a significant role in handling such situations in future.

The historical experience of leadership of the travel organization started in the 1950s, as ABTA was formed from two dozen of the leading travel companies. Subsequently, the united professional efforts provided the status of reliable brand with the help of a broad consumer campaign in 2014. This concept formed the basis of the strategic plan, which has directed further marketing prospects of ABTA. Among them, there is the focus on performance of the successful business that will seek to promote the brand and support its consumers. It identifies the position of the company to concentrate on both own and client needs, which saves it from dictation of customer requirements.

The concept of the marketing strategy also includes maintaining the product quality and ensuring customer confidence in it. These elements have been included in the financial protection program, recommender systems for the consumers, and the code of ethics. In addition, ABTA directs consumer attention to the fact that it conforms to all mandatory standards and legal requirements. Acquainting clients with such requirements, the company creates the strong brand and increases customer loyalty (Perkins).

ABTA includes the key trends of the UK tourism development in the service marketing strategy. This condition allows to supply services with the necessary knowledge about the improvement of the domestic trips and the promotion of the international tourism. For instance, the company understands that affluent consumers are able to increase the benefits of the tourism market. Mastering the tourism market since the 1950s, ABTA monitors the development trends, being able to make forecasts of its operations, while improving the marketing strategy.
The market research, as an initial step of any successful long-term strategy, used to determine the preferences of the consumers. Therefore, the company encompasses the development stages focused on holidays and specific events. Such thematic tours are not only new to the market, but they represent unique innovation of the company. It provides additional security for the formation of a competitive behaviour of the company.

Certainly, the company is focused on innovations since this element is not only a requirement for the market success, but is the main element of its marketing strategy. The innovation activity defines the strategic development trends of ABTA. The association decided to define new destinations and develop the appropriate tours that can surprise and conquer consumers.
This activity is aimed to improve the potential image of the UK tourism sector. During the decrease of the main indicators of tourist activities, the development and implementation of such marketing customer-oriented strategy are important aspects in order to solve many difficulties at both the local and international levels.

Conclusion

Tourism within the travel industry is characterized by its specific features. As the sector of the UK economy, this travel service changes its performance according to the phases of the economic cycle. Some reductions in the tourist flows at the beginning of 2015 can be explained by the decrease of tourist activity in the UK. However, these trends are not planned to stay the same or fall dramatically, as tourism is highly developed in this country. The well-established tourist infrastructure, historically predisposed social habits to travel, social and economic communications with other countries, and the major tourist resources contribute to the planned growth of the UK tourism indicators.

Many strategic marketing shifts among the players of the tourism market are focused on the successful implementation of new business perspectives. The focus on commercial success only impedes the normal course and forces the unbalanced business entities to leave. However, the game according to the rules of the market and its strong strategic and marketing positioning contribute to resistance to many benefits, as in the case of ABTA.