The tourism industry of Europe is vibrant and the development in this sector is accelerating at an easy pace. In recent times, the travel and leisure industry has gained large amount of momentum as it is greatly inspired by the changing dynamics of the population; it has become a networked society in which everyone is linked alongside one another by various technological mediums (Tourismlink, 2012). With the climb of the industrial society, the idea of tourism has changed into a 'mass leisure activity'. The globalisation and post modernisation are the two vital factors that have made a fragmented, assorted and individualised field of travel and leisure demand and supply.
In European countries, the tourism industry is having consolidation in which the amount of players is lessening because of this of both mergers and acquisitions (ECORYS, 2009). The principal factors which have supported the formation of a built-in and strengthened travel operator are increased globalisation, new and cheaper methods of transport and severe usage of Information and Communication Technologies (ICT). As the tourism industry is now competitive on international level, it is becoming vital for the travel operators to consider consideration of the factors that can impact their business operations.
In order to determine the external environment encountered by the travel operators in European countries, PESTEL research is an efficient tool for ensuring that important aspects are properly handled. This research allows the players to stay alert about the external environment characteristics that can impact their business strategies and eventually operations. The PESTEL research of tourism industry for Western european tour operators is as follows:
Since the 9/11 event, the airline industry needed to tolerate high costs as the government has refused to tolerate the security cost. As the costs can't be tolerated by the flight companies, they may have transferred the entire cost to the consumers. The immigration laws and regulations have been made tight so that the corrupt elements cannot gain entry in the country (Butler, 2011). There are several countries that are willing to join the European Union (EU) which can impact the politics environment significantly.
Euro is a solid currency worldwide which allows easy conversion of the money. Similarly, the parliament of European union has asked the airlines to pay taxes on the aviation gas in order to support the European union carbon emission trading design (Furmanov, Balaeva & Predvoditeleva, 2011).
The tourism industry is damaged by the downturn. A lot of the airline companies are relaying on very low margin of income and both big and small players are being afflicted by such depressing situations worldwide. Once the recession are certain to get over, only then the bigger players will be able to exploit the opportunities and even gain new opportunities (Richards, 2011). The recession has impacted the exchange rate as there is a lot of fluctuations in it. It's been reported by Richards (2011) that Euro is still depreciating and the euro rate has been reported to depreciate by 20% of the buck.
The living standards of people are improving and life span rate is also extending at a fast pace which ultimately shows that the elderly will travel more to truly have a good time. It is expected that the percentage of aging populace that will travel in Europe will be about 60%. The travel patterns of individuals are changing as they want a diverse selection of options in selecting the going destinations; the consumers are expecting a multitude of choices as they would like to travel different places and make their visiting plans independently (ECORYS, 2009). Additionally it is projected that the number of short vacations will expand by about 47% in European union and European visitors have improved their behaviours as they prefer to travel in another country rather than home places.
As a result of technological advances, the task of tour providers has become automated. A lot of people are employing Internet to make online reservations and avail the services of online travel businesses. Virtually all the tour operators are utilizing both traditional and online systems for achieving customers and they have helped them in curtailing down the expense of these operators (Furmanov, Balaeva & Predvoditeleva, 2011).
Since people have become too much environmentally concerned, the UK government stopped the program for one third runway at Heathrow consequently of upsurge in pollution. The government has even enforced the green tax for offsetting the carbon emissions result. Some health factors like SARS and Swine flu impacted the traveller's vacation spot choice (Tourismlink, 2011).
In order to keep a stringent control on the tour operators, the federal government has enforced stricter rules and regulations. The competition insurance plan of EU continues an eyes on the firms to ensure that they don't really club together to give unfavourable packages to the clients (Richards, 2011).
According to Tourismlink (2011), the research of the EU tourism industry in line with the Porter's Five Forces Model reveals the next aspects:
The new entrants cannot easily get into the travel and leisure industry as you can find high cost associated with preliminary investment cost as it requires large amount of capital. The prevailing companies have strong brand loyalty therefore the customers won't easily switch to some other company.
Within the market, there may be very less extreme competition as there are just limited big players. Although there are many indirect competitors in the industry but the top players in European union remain Thomas Cook and TUI Travel PLC.
In the case of tourism industry, the bargaining power of suppliers is modest as there are many options airlines, hotels and travel companies. Since the customers are prepared to do online booking, the airlines and hotels are attaining them by their own online websites.
The bargaining electricity of potential buyers is low as there may be very less difference between the products that are provided by the travel organizations. As the clients have the ability to make online booking, even it will not impact their bargaining vitality.
It is a known fact that people will never leave their leisure activities especially the travelling option as it offers them the opportunity of going away from home. Other alternatives are available for individuals such as in-home activities, domestic journeys to town, participating in video games but they can never replace the travelling option. It means that you will see low threat of substitutes.
The concept of Tourism Area Life Routine was coined by Butler (2011) who mentioned that the head to providers have to analyse the industry to ensure that they expose the new products and services in accordance to the needs of the customers. The factors that are considered by the players will be the prices wanted to the customers, packages designing in line with the vacation spot places, changing needs of the clients, places of interest to be presented to visitors and availability of various facilities. Currently, EU's tourism industry is in the consolidation level as there are only few competitors and people are spending limited sum of money on foreign vacations.
Source: Butler (2011)
The effect of recession is slowly but surely wearing off and EU travel and leisure industry is expected to expand further by offering various attractive deals to the clients. hence, the tour operators have to ensure that they present the best travel deals to the customers that allows them to reap the opportunity of having a marvellous travelling experience in your community.