HEALTH CHECK OF AN EXISTING TRAVEL BUSINESS
Health Check of an Existing Travel or Tourism Business
ID: 11620
19.04.2015
Task I
Introduction
Tourism industry has been booming since the last decade and people from all around the world have always been seeking opportunities for going to the long tours in different destinations of their choice. As a result, we can find several players into this industry that have been providing the best of the packages and services to the customers. The service providers seem to be modifying their activities since they are motivated to provide the best services to their customers. They are introducing different schemes and offers so that the customers can buy from them easily.
And, it also seems to be a good trend of marketing and promoting such tourism packages so that the customers can know more about it. It will at least provide them with the necessary information that will guide them to plan for the tour. In addition, during festive occasions and other such events, customers can decide upon the destinations of their choice and a complete package can be selected in such cases. This report will thereby discuss upon how tourism has gained importance in the recent times. It will thereby take into consideration one of the leading tourism companies and will evaluate it from the SWOT and PESTEL Analysis perspectives.
Trafalgar tours is a company that deals in tour and travel and gives a managed and well scheduled holiday package worldwide to almost around 200 destination. The Travel Corporation is owner of the company which was established in year 1947. In Australia, Canada, China, New Zealand, Singapore, South Africa, and the UK and in USA it has its offices. Bhatia (2004) observes that it offers various tourism packages and even expert guides who gives complete knowledge of place that is been visited.
Mission
A Trafalgar tour is a company which deals in tour and travel. It provides exciting and adventurous travel arrangements and attracting packages. Main mission of Trafalgar is to attain the best place in market of Pacific Northwest in field of travel and tourism and become the best service provider.
Almost all of the Trafalgar employees and owner are enthusiasts of tour, travel and outdoor adventures. They are even seasoned travel industry professionals. Trafalgar seeks to attain connection between the new tour and travel guest and professionals with service providers, activities of adventure and housing arrangement as per clients desire, budget and skill level.
Keys to success
It efficiently divides and aims at that part of market in which huge number of travelers is present that are interested in adventures trip. Bhatia (2004) argues that this company has become successful after making its place and name in market as a tour and travel specialist. It effectively did its marketing through personal skills by direct contacting people and by even using communication media. It has developed its strong relation with its loyal and old customers.
Tourism and travel have their own advantages. It broadens the mind and fills the gap between people. The travel or tourism business companies or agencies play a very important role. They take us to those places which are not stated in the guide books, to those people or tribe which we would have never visited or met and tradition of which we were not aware of. They take care that the tourist gets the complete insider view, a genuine and aggrandize experience which they would have never enjoyed alone.
Trafalgar is one among the top tourism company. Its great dedication towards its guest and passion to take them far off in the best places has helped it to achieve this height and place where it is, in the past 65 years. All over the world it is one of the best trusted and successful international holiday or Tourism Company.
They are spread all over Europe to the United States, South America to South Africa. They bring forward the hidden gems; cultural highlights and beauty of place their guest visit. They help their guest to do research on the places, cities or towns they visit and enjoy the true essence of environment and places they visit.
PESTEL analysis is a part of external analysis that is done while doing research on market. It gives idea of different factors that company should consider.
i. Political factors: It reflects the involvement of government in the economy. The few political factors are taxes, labor law, trade restriction, environmental law etc.
ii. Economic factors: It includes the economic growth rate, interest rate, inflation etc. These factors greatly affect the decision taken in business and how to operate them.
iii. Social factors: It includes social factors such as health issues, population growth rate, age, employment etc. The social factors directly affect the company’s product demand and working of company.
iv. Technological factors: Under this come the environmental and ecological factors such as R&D activity, automation, change in technological rate etc. They can identify the problems and can even find out efficient production levels.
v. Legal factors: Under this comes the Law discrimination, consumer law, employment law etc. These factors can determine working of a company, its cost and sale of products.
A SWOT analysis is a structured planning technique that is used to analyze the power, frailty, chances and risk in a business. SWOT analysis can be done for a product, industry or a person. It specifies the objectives of project and recognizes the internal and external factors that are useful or not useful for achieving objective.
• Strengths: The current business has been performing well since it is well aware of the environmental factors. The management is able to plan the strategies for the future, in order to capture the additional market share.
• Weaknesses: The business has been lacking in gaining the right direction of business due to lack of human resources and necessary expertise. It needs to quickly resolve these issues in order to achieve the desired objectives of the organization.
• Opportunities: The organization has the opportunity to expand into different nations and provide the customers with different tourism packages as per their needs. It can utilize the markets of those nations, wherein tourism has not yet developed. According to Chhabra (2010), it can thereby, become the first player to enter into this industry for such nations.
• Threat: The increasing market competition and the way of providing different tourism packages has posed stiff challenges to each of the organizations in this field or industry. Every time the customers will be expecting the best in terms of packages and services, and hence, the organizations, will be required to work upon such issues at the earliest.
Thus, SWOT recognition is important as it informs the next step or stage in the planning to meet the objective. There are even factors that influence the growth and development of tourism business. These are as follows:-
• Environmental factors: The two main environmental factor that has helped in growth of tourism are :-
i. Good climate: Tourist places with good climate attract more tourists. Tourist prefer going to those places where climate is opposite to the climate of place where they live for example people from summer areas move to cooler regions.
ii. Beautiful scenery: Along with climate, the surrounding should also be pleasing which relaxes the mind and soul of visitor. For example fresh water lakes, and beaches etc.
• Socio-economic factors: The four main socio economic factors that affect the tourism growth rate are
i. Accessibility: It is the most important factor among the entire socio economic factor. People prefer going to only those tourist places which are easily accessible by various transportation means like roads, railways, air and water.
ii. Accommodation: Tourist place should also have good accommodation facilities so that tourist can plan their trip accordingly and choose their accommodation type as per their budget, standard of living, and other requirements etc.
iii. Amenities: Maintenance of tourist place also plays an important role in attracting their clients. A tourist place should have good tourist activities like fishing, surfing, safari adventure etc. Emergency facility should also be available.
iv. Ancillary services: facilities such as banking, finance, internet facility, telecom, hospital etc. in tourist place helps in holding the tourist for a longer duration of time. And this helps in growth of local economy.
Historical and cultural factors
Tourists are attracted to places which have a historical significance and are rich in culture. People prefer going to those places which have ancient monuments, forts, kings and queens palaces etc. Examples of such places are TajMahal, Pyramid of Giza in Egypt, and Great Wall of China etc.
Religious factors
People prefer going to places rich in religious values. They visit these places in search of inner peace, to get blessings of their gods and gurus, to attain salvation before dying etc. In such cases its people faith, beliefs and emotion that encourage tourism at holy places. For example Varanasi, Amritsar in India, Mecca and Medina in Saudi Arabia etc.
Other factors
Other factors also come up with features that attract tourism at unexpected places. For example UFO crash site in Roswell, New Mexico (USA) attracts many visitors from all over the world. Research activities, investigation on paranormal activities in ghost town, hot-water spring, geysers etc. are also few factors which attract tourist to some extent.
Potential Improvements to the business organization and/or operation
The potential improvements that can be made using the analysis are as follows:
It has been highlighted in the SWOT analysis of this organization that the lack of sufficient skills among its human resource as well as increased competition in the market are the most intriguing factors that it has had to contend with for many years. It is obvious that for this company to continue operating in the most efficient manner, improvements and alterations have to be made to enable it to attract the best trained and experienced employees and at the same time devise suitable mechanisms of ensuring that it beats the increased competition in the market (Chhabra, 2010). The TOWS matrix below can help to explain the framework that can be taken by the company to ensure that there are enough strategies can help it to overcome the threats and weakness that have been documented in relation to its operations.
STRENGTHS – S
1.Good Climate
2.Beautiful Scenery
3.Many years of experience
4.Customer loyalty
5. Accessibility
6.Superb Accommodation services
7.World Class ancillary services
WEAKNESSES – W
1.Lack of enough trained human resources
2.Cross-border bottlenecks
3.Poor communication frameworks
4.Logistical hitches
5.Poor pricing strategies
6. Flat operating cost through falling revenue
OPPORTUNITIES – O
1.Global market potential
2. Presence of well-trained labor force in the global markets
3.Increased demand for tourist services
4.Inmproved transport and communications Infrastructures
5. Popularity of English language in the major and emerging markets
6. Approached by many organizations for merger
SO STRATEGIES
1.Open branches in new markets with great potential
(O1, S1, O3, O4)
WO STRATEGIES
1. Pursue merger with other travel companies
(O3, 04, O6, W1, W2)
THREATS – T
1.Increased competition
2.Risk of trip cancellations
3.Risk posed by terror attacks and insecurity
4.Religious and cultural interferences
ST STRATEGIES
Enhance services in markets that have the highest potential
(S4, S6, T1, T2)
WT STRATEGIES
Reduce corporate overhead
(W6, T1, T2, W4, W5)
The organization has to open new branches in markets that have the greatest growth opportunities especially in South America and Africa where there is much potential. In so doing, it shall be taking advantage of globalization that has opened up the international markets as well as the improvements in the transport and communications infrastructures. In so doing, the tourists shall be able to enjoy the tropical and other conducive climates while on holidays.
There is also need for Trafalgar Tours to merge with other companies operating in the same industry that shall help to increase its presence and prominence in the global market. The merger should be taking advantage of the opportunities like improved transport and communications frameworks, increased demand for tourist services, and the recent approaches by other companies for potential mergers. The merger shall help to overcome weaknesses like lack of enough trained human resources at the disposal of Trafalgar Tours and also help to reduce reported cross-border bottlenecks.
The management of this company should also consider enhancing its services in markets that have the highest potential for the obvious profitability reasons. Markets where customer loyalty and accommodation services are fantastic should be given top priority since they shall help reduce the overall threat of increase competition as well as trip cancellations that have become rampant in the recent times.
Reducing corporate overheads should also be a strategy that this esteemed company should be aiming at pursuing. The strategy shall help deal with logistical glitches, flat operating costs through falling revenues, and poor pricing strategies. The threats that shall be managed via this strategy include increased competition and risk of trip cancellations by the customers.
Review of the effectiveness of the business
Trafalgar Tours has been lauded as an outstanding company in the tour operations industry where it has managed to win various awards at the international forums in recognition of its outstanding performance. In 2012, it was crowned as the best international tour operator in a function organized by Australian National Tourism Industry Association. It had earlier on got another outstanding award in 2011 after the US travel agents had voted it as being the best international tour operator for the fifth consecutive year. Canadian travel agents also went ahead to vote it as the best in its category during the same year. Another award originated from Luxury Travel Magazine that recognized it as the Best Tour Operator in 2005. These awards as well as the financial performance speaks volumes about the progress that the company has been making over the years to help it reach the recorded milestones.
I. Products/services
The company is categorized as a travel company that has perfected the art of providing guided holidays to people where they have to choose from over 200 destinations worldwide. It has opened up offices in the leading markets like US, UK, China and Canada among others where the demand for the travel and tourism services is quite high. What the company does is to link the customers to various destinations that they wish to travel by helping to facilitate travel and booking services with liaison to the host companies and destinations. The company has excelled in its performance over the years that has led to consumers and other organizations recognizing its services as the best in various categories over the years.
II. Marketing and Sales
The company has an elaborate marketing and sales framework where it aims at reaching out to all potential customers via the mass media and the internet. There are advertising agents that have already been identified by the company and placed in various destinations to help market the activities of the company. The interested customers are provided with an online framework to book and be served at destined offices. The marketing and sales departments’ works in a collaborative manner where they supplement the efforts of one another.
III. Finance and overall business performance
The reason behind the recognition and appreciation of this company by other industry players and the general public comes with massive financial benefits in the sense that majority of the travelling customers seem to be attracted to performing tour operators. The gross and net margins of this company have been growing at a rate exceeding the industry average of 5% in the last decade courtesy of opening up of offices in new destinations and the increase in the clientele base (Roday, Biwal, & Joshi, 2009). The levels of returns on assets and other financial obligations have showed a lot of positivity in the recent past and there are indications that the company shall continue growing and expanding into unforeseeable future.
The company has managed to open up its offices in the emerging markets like Singapore and South Africa to confirm that indeed its performance is on the rise. There have been deliberate mechanisms to merge and partner with other tour operators as well as other companies operating in the tourism industries to continue enjoying the financial benefits that the company has been accustomed to courtesy of its strong presence in the market.
Plans to improve the business
The management of the company should realize that the future prospects of this company depends solely on the present plans and aspirations. In the same regard, there is need to have a superb human resources, finance, marketing, and risk reduction plans to help the company to move in the expected direction.
I. Human resource development plans
The company is already facing acute shortages when it comes to the idea of having enough well trained and experienced employees who can help the company to achieve its objectives quite easily. In the same regard, the company has come up with the on-job training to enhance the skills of its employees and others have been given chances to pursue higher education paid for by the company (Robinson, 2009). The management has also been recruiting new employees where competency and education qualifications are given top priority. The idea has been trying to come up with superb employees who can fit into its plans.
II. Marketing Plan
The company has come up with a market segmentation framework that has seen it divide the market into segments that have to be covered separately. The segmentation helps the management to concentrate on each market at the required time thus facilitating the promotion of its activities.
III. Financial plan
Financial planning and management are issues that have always been at the fulcrum of this company where the management has employed various techniques and professionals to safeguard its revenues and other financial assets. At the moment, the automation of financial services is at full gear where customers are expected to pay using credit cards or other online platforms as opposed to cash. The management has employed competent financial managers and advisors to help it move with speed towards prosperity. There are numerous appraisal techniques that are used by this company to gauge the suitability of an investment where NPV and the Payback are the most common in its activities.
IV. Risk management and reduction strategy
The management has come up with various strategies of managing risk where efforts have concentrated on financial and image risks. In the financial section, there are internal auditors and accountants who are ready and experienced in tracking the financial dealings of the financial managers. When it comes to the image risks associated with negative publicity and market rivalry, the company has hired reputable public relations officer that manage its media platform that help to dispel rumors and clarify the facts surrounding its activities (Holloway & Humphreys, 2012)
Conclusion
The government and tourism companies of different countries should work together for the development of tourism in their country. Various strategies should be made which forms the foundation for a long duration and well-coordinated approach for the growth of the tourism sector. The government and Tourism Company should also work on get into international trade business. They should even regular take care of tourist places and prevent them from getting damaged as it is the once of the main source which earns foreign currency.
The first step that should be initiated is collaboration between the tourism company and the government. The next step that should be taken is to work together to enhance the strategies and to set the priorities and main aim. Government of all the countries in collaboration with industries must work together to turn their plan into action.
Further, even the customers can provide their recommendations and opinions regarding what kind of tours they prefer and for many days they are planning for such tourism tours. They can provide their feedback so that even the tourism operators can plan tours for them. This industry is going to evolve on constant basis, and hence, we can find that, changes will come every now and then, and hence, in one way, it is better for the end customers. The tourism operators and the government agencies can collaborate and can provide the best packages and offers to their customers.
Bibliography
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