Hospitality management
Introduction
One of the economic activities with a global aspect is tourism and hospitality. Tourism and hospitality take place in every part of the globe ranging from the world biggest capital cities to poor villages in the rural areas. The economic contribution of tourism in different countries has led to increased focus through increased funding. Hospitality and tourism are among the leading and the largest industries in the world. It is among the major sectors of the country's economy that contributes millions of dollars into the economies of the world annually (Harris Griffin & Williams 2002, p. 82). Tourism and hospitality create numerous employment opportunities for thousands of people, playing an imperative role in the reduction of poverty and the generation of wealth.
Tourism and hospitality have played an imperative role in generating exports which stimulate investments of capital as well as boosting taxes in the global economies. Hospitality and tourism are some of the economic industries in the world that are diversifying in a major way. Tourism and hospitality immensely contribute to the global GDP with a significant part of the total GDP being generated from the industry. However, different trends in the global economies influence the future of hospitality and tourism in different ways. The rationale of this paper is to evaluate the different current trends in the world’s economy and examine them critically to evaluate their impact on this sector. This paper will focus on the Australian economy to evaluate and find how the tourism and hospitality market will be influenced by the current changes in the economy (Glaesser 2006, p. 49).
According to experts in the fields of the industry and economics, all the sectors that form the hospitality industry such as catering, recreation and entertainment have recorded a significant growth. Tourism on the other hand has increased in a considerable percentage, and the impact has been felt across different communities globally. It is worth noting that tourism has the capacity to provide employment for different types of people. This can play an imperative role in the reduction of poverty and creation of wealth in a country (Page 2011, p. 73). Tourism has been attributed to high income and improvement in the balance of trade in a country.
Foreign Direct Investment and Expenditure
It has been identified that tourism and hospitality industry have the capacity not only to contribute to the economy and create employment, but also to provide enlightenment to the people. This is because the demand in tourism and hospitality is increasing day by day. The surge in demand for hospitality and tourism services is expected to increase even higher levels in the future (Kenchington 2012, p. 32). The increased expansion and growth of emerging markets have been identified as among the major factor that will facilitate the growth of the tourism industry. It will also increase competition and expand the market share. Over time, there have been an increased investment on the development of tourism is being done. This is expected to change the tourism sector in a great way and will take it even higher to make it a key driver with regard to social economic progress.
In Australia, the hospitality and tourism sector contribute $40.639 directly into the economy’s GDP. In addition, tourism and hospitality have made a great contribution with regard to employment creation where they make a direct contribution of 4.7% with respect to the total employment. Due to the current changes witnessed in the global economies there is a need to increase expenditure into this sector. The government has increased investment in the infrastructure and other amenities that will facilitate the tourism sector. An improvement in the levels of investment in this sector will lead to the creation of resources that will facilitate expansion of the industry (Holmes & Smith 2009. P. 23). For example, it will lead to increased accessibility of different areas and expand the industry.
The tourism and hospitality industry in Australia has experienced exponential growth and developed as a result of increased foreign and local direct investment in the sector. This has been due to increased government investment into the sector as well as the creation of incentives that have attracted numerous private investor both locally and in foreign countries. There has been an increased focus on the need to increase investment in the tourism and hospitality management industry (Pforr 2009, p. 28). This results from the increased competition from emerging markets that may affect the demand if tourist shift towards emerging markets. Therefore, increasing investment will facilitate the development of more tourism attraction sites as well as maintenance of the existing tourist attraction.
Impact of Economic Crises on Australian Tourism and Hospitality Industry
The hospitality and tourism sector have experienced numerous challenges in the aftermath of the global financial crisis. However, after a substantial contraction in 2008 and 2009 there was a rebound in 2010 where there was a significant increase in the number of international tourists, in Australia. This was projected to increase significantly in the year 2011 and 2012. However, the global economic crisis not only affected the tourism industry, but also other sector of the economy. However, the economy recovered in 2010 and 2011 with the tourism sector contributing significantly to the economic recovery of the country.
Crisis in the tourism sector is shared in the aspect that they are traced from economic, sociocultural and environmental aspects, which affect demand and supply in the countries of destination and origin countries. For example, there are various consequences that follow crisis such as fluctuation of the exchange rates, loss of market confidence, recession and withdraw of investor funds can have a direct bearing on tourism and hospitality management. A crisis can occur at different levels of tourism operations, which can also vary in degrees of severity. However, the crisis can be internally or externally generated. In addition, crisis in the tourism and hospitality industry is susceptible to a wide range forces and negative perceptions within the industry (Beech & Chadwick 2006, p. 38). For example, political disasters, environmental and economic disasters can take a toll on creating negative publicity of the country. However, in this case, the global financial crisis affected all countries across the globe.
Economic recessions have the effect of undermining demand as a result of the shrinking capital market that results in decreased spending by the corporate and individuals in general. Economic crisis can also be in the form of inflation where the country experiences a general increase in the price of commodities. In this case, all products in the economy experience increase in prices. The increase in prices can be attributed to changes in the cost of production, which is referred to as cost push inflation or an increase in demand, which is referred to as demand push inflation (Glaesser 2006, p. 83). The economic crisis affecting the tourism industry led to the closure of some services and products offered in the industry. In addition, the spending per guests visiting hotels declined significantly and especially causing significant decline for luxury products and services in the industry. Tourism and political systems are highly interrelated, but the Australian government has been stable and has retained good relations with numerous global partners (Glaesser 2006, p. 42). In addition, tourism and hospitality industry has been playing an imperative role in the contribution to economic growth and development. Therefore, it has been supported by the government and the recovery process has been good.
Global economic crisis also affects the exchange rate of a country in respect to other currencies, which may affect the tourism and hospitality industry significantly. For example, after the global crisis, the Australian currency depreciated relative to other currencies. This had a direct impact on the industry since there is a substantial number of tourists visiting the country from other countries. Economic crisis affects individuals and corporate purchasing power significantly. During such crisis, individuals and corporate avoid unnecessary expenditure only spending on the essentials (Godde Price & Zimmerman 2000, p. 57). The tourism and hospitality industry characterized by numerous luxurious products is hence affected significantly during such periods.
There has been a crisis in the global cost of oil in the recent past which also affected the tourism and hospitality industry significantly. Travel is highly interrelated with tourism and hospitality industry. Travel involves consumption of the fuels, which have increased in prices leading to an increase in prices charged for flights and road travel in fueling vehicles. From economic analysis an increase in the cost of production leads to decreased demand as prices takes an upward toll (Kenchington Wood & Stocker 2012, p. 23). Therefore, unpredictable global prices of oil can create uncertainty in the tourism and hospitality industry.
Sustainability in Tourism Hospitality Industry
In the recent past, there has been an increased focus on the need to maintain the environment. The hotel industry globally has also been on the forefront in creating sustainability in tourism and management of the hospitality industry. This has led to the rise different aspects in the hospitality industry such as eco-tourism among other innovations that have been introduced in focusing on environmentally friendly practices in tourism. For example there has been an increased concern in Australia among other regions on the degradation of the coastal strips (Hall Timothy & Duval 2003, p. 73). There has also been an increased concern on the overcrowding around beaches, which causes increased population and overuse of the resources available.
Therefore, the global concerns about the need to maintain the environment affect the Australian tourism and hospitality management industry. This is because, as a country it has to ensure maintenance of global standards of the environment. It has to ensure eco-friendly tourism and taken measures that improve the impact of tourism on environmental resources and the local communities (Dissegna 2005, p. 28). Sustainable tourism is a comprehensive approach that encompasses economic, social-cultural and environmental aspects of the tourism industry.
The Australian tourism and hospitality industry has been on the forefront in ensuring professionalism, profitability and sustainability of the industry to ensure that the industry is in line with international standards. Australian entrepreneurs are adopting greener and sustainable practices. This has led to an environmentally receptive and growing industry that reduces environmental impacts. For example, various hotels have been on the move to invest in water and energy saving initiatives (Baume 2000, p. 18). Additionally, there has been an increased training and development programs aimed at increasing awareness and educating the people working in the industry in sustainable practices.
In conclusion, the tourism and hospitality industry plays an imperative role in the economy. It contributes significantly to economic growth and development through contribution to the GDP and the provision of employment opportunities. However, there are numerous factors in the global economic arena that affect the operations and profitability of the industry. For example, foreign direct investments, which positively impact the tourism sector in Australia as in any other region. The global financial crisis has also had a direct effect on the growth of the tourism industry. The global financial crisis has social, cultural and economic effects on the global economy. Therefore, it was significantly affected by the crisis but has rebounded from the crisis strongly contributing significantly to the economic recovery of the country. The issue of sustainability has also been an important social-economic issue that has been accorded a lot of attention from world players. The need to ensure sustainability in tourism has led to increased focus on ensuring sustainable practices. Sustainability has social and economic aspects.
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