Challenges and Changes in UK Tourism

Introduction

Tourism is one of the largest and fastest growing global industries in the UK. The sector provides over 1.5 million jobs in the market and 11.4% of the total Gross Domestic Product (GDP) in the economy. Travel agencies play a significant role in the tourism sector as they act as intermediaries between tourists and their destinations. However, travel agencies are highly vulnerable to challenges and changes in the industry ( Xiang and Tussyadiah 2014) . Arguably, the two top emerging trends in UK’s tourism industry are ICT integration and increasing number of grey tourists in the market. Effective management of emerging tourism trends is critical for the survival and competitiveness of travel agencies.

Problem Identification

ICT integration in the tourism industry has led to a paradigm shift in the tourism industry. Tourism thrives on the power of communication and ICT facilitates information sharing among all stakeholders. There has been a significant increase in internet usage in virtually all sectors of the economy, particularly tourism (Antonakakis, Dragouni, & Filis 2015). ICT incorporation into the industry, nonetheless, has received less than an enthusiastic response from travel agencies who consider the development a disruptive innovation. Strategic analysis is vital in the ascertainment of the impact of ICT in travel agencies operations.

SWOT (strength, weakness, opportunity, and threat) Analysis is an appropriate strategic tool for evaluating the impact of ICT in tourism. Adoption of ICT provides several strengths for UK travel agencies ( Nwakanma et al. 2014) . Foremost is lower operational costs as all transactions are completed via the internet sparing consumers transport and processing costs, and reduced costs are passed on to the consumers. Secondly is direct interaction with customers facilitating fast service delivery rates that results in high customer satisfaction. ICT also provides a number of opportunities for travel agencies including access to global markets that undoubtedly increase their revenue levels (Giaoutzi 2017). Moreover, travel agencies can use ICT to create new international partnerships in their quest to expand market share and attract new customers with varying preferences for travel destinations ( Nwakanma et al. 2014) . Besides, ICT helps in the provision of better services and facilitates product differentiation and creation of new distribution channels in the market. Full exploitation of new market opportunities and reliance on ICT strengths is a guarantee for success in the tourism sector.

However, weaknesses and threats associated with ICT deter travel agencies from fully embracing the change. ICT introduces threats in the tourism sector including the penetration of international firms in the UK market reducing local firms’ market share, and emergence of price wars among competitors (Wee 2017). As a result, there is a general fear that ICT will bankrupt small and medium sized travel agencies in the country because of their ability to reduce costs to unrealistic levels edging them out of the market. ICT weaknesses include high technological investment and security problems making it difficult to protect customers’ data. Following this fears it would be unreasonable to expect travel agencies to gladly accept ICT.

The growth in grey tourism is arguably the biggest change in the demographic of tourists visiting the UK. Grey tourism relates to the market of tourists aged 55 years and above ( Sanmargaraja & Wee 2014) . Today, many senior citizens save for trips or use their retirement money to travel the world. However, grey tourists have varying needs from other consumers and their management requires a different level of expertise that can only be determined through strategic analysis.

Application of the SWOT analysis to grey tourism creates a different perception about the new development in the industry. Arguably, the creation of a new revenue stream is the greatest strength of grey tourism for travel agencies. Emergence of new markets provides the opportunity of tapping into new opprtunities through the provision of the desired tourism experience for grey tourists ( Sanmargaraja & Wee 2014) . On the downside, the threats to grey tourism are health and mobility problems among the elderly in the society. Since grey tourism is fairly a new uncharted area, there is a weakness in the lack of adequate information about the market. As a result, it is difficult for travel agencies to take advantage of the new opportunities. 

Strategies to Respond to Change

Travel agencies should develop strategic responses to the changes identified above. Foremost is new product development and innovation for varying customer groups in the market. There is a growing need for service personalization in the tourism sector due to growth in customer awareness levels ( Pikkemaat and Zehrer 2016) . Besides, creation of new products opens new local and international markets for agencies.

Adoption of internet-based marketing strategies will certainly increase the travel agencies visibility in the market. Technology has led to the creation of a global village by facilitating international communication and service delivery. Competition intensity has significantly increased in the market and buyer switching costs is also low ( Pikkemaat and Zehrer 2014) . Advertisement is vital in bringing products into the market and making agencies the top choice among millions of consumers.

Also, travel agencies should rely on target marketing to increase sales revenue in specific markets and diversify revenue sources. Target marketing is based on the concept of market segmentation, where organizations set out to determine unique needs of different members of the society. For small businesses, revenue diversification has significant positive implication as it increases their capability to compete with other firms especially when price ways are initiated for certain products.

Investment in secure ICT is critical for travel agencies that wish to continue operating in the UK market. Compromise of data security and integrity systems, nonetheless, is a major problem for many companies in the market. Loss of customers’ data results in poor business reputation and lack of confidence and trust in the organization. The resultant effect is loss of loyal customers to other entities with more secure systems. 

Strategy Justification

Given the travel agencies desperate situation, two strategies among the four listed above can be justified. First and foremost is product innovation to meet the growing demands of the grey market segment ( Sanmargaraja and Wee 2014) . Preferred holiday products among the elders should be located in convenient places that are easily accessible to the target market. Moreover, it is essential to incorporate health promoting factors in the holiday packages to encourage senior citizens to enjoy their time without worrying about their medical conditions.

Secondly, travel agencies should employ the internet-based marketing strategies to capture new markets opened by ICT integration into the sector. Internet marketing is a multi-channel approach that brings customers into contact with diversified members of their consumer base (Chung et al. 2015). Through internet marketing, the agency’s reputation will grow in the society especially when people discuss the content on the website in what is commonly known as word-of-mouth marketing. Besides, advertisements will also help the agency win more grey tourists through the online portal from the wide selection of other companies serving the same market. 

Strategy Implementation Process

The agency should follow a systematic strategy implementation process for the proposed solutions to work. Phase one is formulating the overall objective of pursuing internet marketing and product innovation, which in this case are attracting grey tourists and creating new competitive advantages founded on effective ICT usage. Second is creation of a formal plan to be followed throughout the implementation process; the strategy blueprint should specify key milestones and functions of all the involved stakeholders ( Carlisle, Johansen, and Kunc 2016) . The third step is resource allocation, which involves specifying the human resources and financial budget required to complete the strategy. 

Communication is integral in effective strategy execution. The communication methods should be determined early and the tools expected to be used to promote constructive engagement among all the employees in the travel agency specified ( Carlisle, Johansen, and Kunc 2016) . For example, product innovation will require the contribution of business analysts to determine the type of new products that a company should create. At the same time, accountants and financial officers should be present to provide adequate resources for the implementation process. Lastly, it is important to undertake continuous monitoring of the two strategies to determine the extent of their success and take corrective actions on observed deviations. As a result, the travel agency will begin to generate positive revenue through the acquisition of new consumers. 

Consequences of Implementation Failure

Failure to implement the two strategies will result in significant negative consequences on the travel agency. The most pronounced change will be the slow market share decline as more customers turn to the online portals to make their decisions, instead of phoning and visiting its premises. The situation will be exacerbated by foreign travel penetration into the market increasing competition level in UK’s tourism industry. The travel agency will try to keep on fighting to retain its position in the market, and will undoubtedly be forced to close operations when the operational costs become too much and revenues dwindle to negatives.

Failure to implement the product innovation strategy will significantly reduce the number of grey tourists using the agency’s service to fulfill their goals. The company will lose out on a potentially highly lucrative business opportunity and its chances of survival will also decline considerably. The expected negative consequences are a testament of the importance of organizational changes in accordance to new market developments.

Conclusion

Changes in the tourism sector are constant. UK travel agencies today are encountering the impact of ICT integration in the market and growth of grey tourism. Travel agencies can overcome these problems through internet-based marketing strategies, product innovation, target marketing, and securing ICT in organizations. Further analysis revealed that product innovation and internet marketing is more likely to lead to positive results than the other strategies. Failure to implement the two strategies threatens the very survival of the agency.

Reference List

Antonakakis, N., Dragouni, M. and Filis, G., 2015. Tourism and growth: The times they are a-changing.  Annals of Tourism Research ,  50 , pp.165-169.

Carlisle, S., Johansen, A. and Kunc, M., 2016. Strategic foresight for (coastal) urban tourism market complexity: The case of Bournemouth.  Tourism Management ,  54 , pp.81-95.

Chung, N., Lee, H., Lee, S.J. and Koo, C., 2015. The influence of tourism website on tourists' behavior to determine destination selection: A case study of creative economy in Korea.  Technological Forecasting and Social Change ,  96 , pp.130-143.

Giaoutzi, M., 2017.  Tourism and regional development: New pathways . Routledge.

Nwakanma, I.C., Ubani, E.C., Asiegbu, B.C. and Nwokonkwo, O.C., 2014. Factors Affecting the Adoption of ICT in the Hospitality Industry in Imo State.  International Journal of Computer Science Issues (IJCSI) ,  11 (4), p.170.

Pikkemaat, B. and Zehrer, A., 2016. Innovation and service experiences in small tourism family firms.  International Journal of Culture, Tourism and Hospitality Research ,  10 (4), pp.343-360.

Sanmargaraja, S. and Wee, S.T., 2014. Grey Tourism in Malaysian Parks.  POPULATION ,  2 (3).Vladi, E., 2014. Tourism Development Strategies, SWOT analysis and improvement of Albania’s image.  European Journal of Sustainable Development ,  3 (1), pp.167-178.

Wee, C., 2017. Emerging trends in tourism: opportunities, challenges and implications.  Journal of Tourism and Hospitality ,  6 (6).

Xiang, Z. and Tussyadiah, I., 2014, January. Information and communication technologies in tourism 2014. In  eProceedings of the ENTER 2014 PhD Workshop, Springer International Publishing: Cham  (pp. 1-146).