TRAVEL & TOURISM SECTOR

Travel and Tourism: Benefits and Drawbacks of Mergers



Travel and Tourism: Benefits and Drawbacks of Mergers

Tourism has developed into the world economy as a very important and dynamic sector, particularly for developing countries. Its growth has consequences not only to the activities associated with tourism (especially in the private sector) but also to other sectors, such as transport . It enables the creation of jobs for various levels, professional and unskilled, and who are often excluded from the labor market, such as women. Tourism industry continues to grow throughout the world (Gartner & Lime 2000, p.236). However, uncontrolled development of the sector could threaten its long-term development. Moreover, uncontrolled tourism development may adversely affect the ecological situation in the country; change the lifestyle of the indigenous population.

Core industry sectors are tourism administration and development, passenger transportation, hospitality, attractions, tour operation and retail travel. The tourism administration segment determines the environment within which the overall industry works while transport, hospitality and attractions sell the services essential to the tourist experience(Säubert 2006 156-211). These may reach tourists directly or indirectly through intermediaries of tour operators. An additional miscellaneous category includes providers of travel insurance, currency exchange and travelers' checks and travel literature (Spilsbury 2011, p.96).

Significance of the Tourism Industry

The tourism and travel industry plays an important economic role in a country's development (Chua 2010, p.19). The primary advantages and disadvantages of tourism are:

Advantages are as follows:

increased cash flow in the region, including foreign exchange;

growing gross national product;

create new jobs;

reformed the structure of rest, which can be used by both tourists and local people;

Raise capital, including foreign. The disadvantages of tourism development are manifested in the fact that tourism:

effect on prices for local goods and services, land and other natural resources, real estate, etc.;

contributes to the outflow of money overseas for tourism imports;

Cause environmental and social issues.

Conventional structures and ways of doing business are, however, changing. Intermediaries are being challenged by new channels of distribution and especially through Internet technology, which facilitates direct communications and transactions between customers and suppliers. This has resulted in threats and also has raised questions about the prospects of “bricks and mortar” travel agents in particular (Gartner & Lime 2000, p.263). Vertically integrated giant travel groups are another power reshaping industry systems, especially in Europe where companies like TUI have their own hotels, airlines, travel agents and tour operators.

The need for mergers and alliances

The motives for forming alliances and mergers in the tourism and travel industry are numerous and complex. It is clear, however, that the recent economic history of the international tourism industry has been characterized by the emergence of many alliances, some of which have subsequently failed and new realignments of companies have been forged (Cartwright 1996, p. 45). Longstanding 'natural' alliances between travel companies and accommodation providers which saw the ownership of hotels by railway, shipping and airline companies, have been replaced by other arrangements as inter-company and inter- modal competition has increased ...