Factors impact the tourism industry

Last Updated: 10 Aug 2020
Pages: 5 Views: 639

What PEST includes?

They are political, economical, social, technological, environmental and legal factors.

Political factors include how regulations are and policies imposed by government might affect the way business is conducted. A number of political factors such as government policies, internal political issues, consumer laws, lobbying and pressure group affect the business strategies of the hotel industry. Take for instance import and export tariffs which can make it difficult or uneconomical to do business with certain countries.

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There may be restrictions on land acquisitions where by the government needs to now the type of hospitality business that is being set up as well as the size of the organization. Therefore if a hotel is wishing to expand as a result of increasing demand or some other factor, government may hinder this growth by bringing forth such laws. Another political factor affecting the hotel industry is the implementation of taxes. Take for instance the Value added tax (VAT) which was introduced in SST. Lucia on October 1, 2012 where hotels are to pay 8%.

This can have a financial burden on some hotels especially those which are struggling to survive in the industry.


Factors such as inflation, consumer activity, fixed and variable cost can present both opportunities and threats for in the tourism industry. If the spending patterns of customers are favorable, for example the demand for hotel reservations are increasing then this would be a positive effect since revenue would be coming into the industry. In contrast if hotel reservations are decreasing then this would not be good for the industry because revenue would be lost.

Inflation is another factor which can affect the tourism industry. It involves a general increase in the price of odds and services and a fall in the purchasing value of money. This can have a chain effect on the tourism industry because a general increase in the price of goods and services means the hotel is spending more on purchases needed to run its day to day activities such as groceries, toiletries and other expenses. To balance off this increase in price, businesses in the industry may increase their prices on services and goods provided; this in turn can reduce demand which may affect profits.

Sociological attitudes and profiles are constantly changing. As a result the tourism industry needs to be abreast of issues such as gender bias, lifestyle expectations and being conscious of social norms. This can help businesses in the tourism industry to develop better marketing strategies. Hotels which target certain type of guest such as movie stars or well known singers need to ensure that strategies are put in place where workers are well trained to liaise with persons of such status. Management can put seminars together winner workers are trainee In areas sun as proper customer service, articulate speech and personality development. Also learn which political factors affecting hotel industry

This would help worker s feel more confident in the workplace which would have a positive impact on the business and the industry on a whole. The Tourism industry operates in a world of rapid technological change. This involves new ways of introducing goods and services and also ways of communicating with target market s. Technology allows businesses in the Tourism industry to advertise online where a large customer base can be targeted. Persons are able to make reservations online which are more convenient and efficient not only to the customer but the business also.

Environmental factors also impact the tourism industry.

This relates to the ecological and environmental aspects that will affect the demand for a company's products and how that business operates as a result. They include environmental regulations, ecological regulations, and reduction of carbon footprint, sustainability and impact of adverse weather. Today, many laws are being placed in order to help protect the environment. Businesses are not allowed to throw particular waste Just anywhere. The seas are protected where by certain waste are not allowed to be disposed in it. In the tourism industry many businesses are looking for ways to lower the impact of their energy consumption.

The positive effect of a responsible environmental attitude is that it may attract new customers who prefer to purchase more ethically derived products. Legal factors have an impact on the tourism sector also. It relates to laws, regulations and legislation that affects the way a business operates. Legal factors which affect the tourism sector include health and safety regulations, employment laws and competition laws. If Health and safety is not well managed, adverse accidents can significantly impact the profitability and sustainability of business in the tourism sector.

If a visitor feels threatened or unsafe during a trip this may impact on the length of stay and expenditure in the country and decrease the likelihood of repeat visits and word- of- mouth referrals.

B) The macro environmental factors which are most important in the present are economical and environmental factors. Economical factors such as purchasing power parity, foreign exchange, trade volume should be important at present because they reflect the way lower local prices or better exchange rates entice rigorists to visit which in turn boosts the well being of the tourism industry.

This would be welcoming for the business in its present stage because a better tourism industry means success for any business in this industry. Another factor which is also very important to the tourism industry presently is environmental factor. A poor environment would never be beneficial to any business be it in the present or future. Therefore proper disposal of garbage, carbon dioxide emissions and sustainable resources are of great importance. People obviously prefer to visit places with "unspoiled" natural surroundings.

C) The factors which will be important to the organization in the next five years are technological and environmental factors.

1 . Technology is forever changing. The programs the hotel uses today may become obsolete in the future and as a result strategies have to be put in place for future technological advances. Technology has ten great advantage Tanat It allows Duskiness's to replace expensive unman ladder, tans not only reducing labor costs but avoiding issues of customer service. Investing in technology can be very costly. Therefore the hotel should plan in advance for future genealogical changes.

2. Environmental factors will also be of great importance in the next five years. Many businesses present actions can have a negative impact on the environment. Most times the effects of such actions are not seen in the present but in the future. Scientists have predicted the damage that global warming has on the earth such as adverse weather conditions which we are already experiencing. This can have a tremendous impact on the organization and by extension the tourism industry. Visitors may not be able to travel and as a result business success and deteriorate.

Therefore Sandals should put strategies in place in order to help facilitate any economical abnormalities which may occur in the next five years. In conclusion, the PESTLE analysis is used to examine the current and future state of the industry an organization belongs to. Therefore Sandals La TCO can use such a tool in its strategic planning which can help management gain a competitive edge over the other firms in the tourism industry.

Reference: Smith, Alasdair. (2013, January 13th). How Business Environmental Factors influence Strategy. Chronic. Com.

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Factors impact the tourism industry. (2018, Jun 27). Retrieved from https://phdessay.com/business-10/

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