Challenges in the Tourism Industry

Challenges in the Tourism Industry

Top challenges confronting tourism are taxation, travel marketing, infrastructure issues, and security and cross border regulations. Too many tourism destinations are not prepared for visitors. Tourists or travelers can at times deem travel marketing to be exaggerated. Another major challenge that the tourism industry faces is the fluctuating rates and cost inflation. New challenges seem to arise quickly impacting the industry as a whole.

What is coming to tourism? What will the tourist sector have in the coming years? It is the question that all professionals in the travel industry would like to have answered. Let’s look at some of the challenges faced by the travel industry and what the future looks like.

Impact of Coronavirus on Global Tourism

The coronavirus health crisis has hit the global economy hard and the tourism industry most of all. The World Tourism Organization (WTO) is expecting a drop in tourism revenue of 300 to 500 billion dollars in 2020, up to one-third of the 1,500 billion generated in 2019. Although the coronavirus crisis has short-term destructive effects on the tourism industry, it is challenging the practices of the tourism industry and is drawing attention to a succession of issues like poor risk management in the travel industry, viral globalization, and travel of diseases with tourists to cross borders.  This is also an opportunity to rethink the tourism industry from a critical perspective. There are several areas for potential transformation and move towards responsible, sustainable, and socially innovative tourism.

Cost of Vacation & Inflation

One of the major challenges that the tourism industry faces is the fluctuations in currency exchange rates. The inability to know the value of a currency means that long-range tourism prices are especially hard to predict and the fallout from this monetary instability is already impacting multiple tourism support systems. The tourism industry is seasonal in nature and does not guarantee round the year flow of income which hampers the overall business setup.

Inflation is rising at an alarming and restaurants have had to raise prices or lower their service. Transportation companies have been hard hit. The airline industry is especially vulnerable. Airlines depend on both the food industry and the fuel industry. Already on the margin, airlines can do nothing more than cut services and raise prices. The result of such a situation keeps the leisure travelers stay away from expensive vacations which further hits the overall tourism sector.

Tax and Tourism

The tourism industry is a heavily taxed sector in some countries. Various taxes are levied across the entire industry right from tour operators, transporters, and airline industry to hotels and these include service tax, luxury tax, tax on transportation, tax on aviation fuel, and various taxes on transportation. In addition, these tax rates tend to vary across different states in the country. All these taxes are finally passed on to the travelers in one or the other way thus hampering its growth.

Challenges in the Tourism Industry

Risk & Security of Tourists

Safety will always be a paramount consideration for the traveler. Security has been a major problem as well for the growth of tourism for a number of years. Improper law and order, terrorist attacks, political unrest adversely affect the sentiments of foreign tourists. Despite the economic growth, tourism is vulnerable to natural and man-made crises, unexpected events that affect traveler confidence in a tourist destination, whether the risk is real or perceived.

Already the events of the twenty-first century have tended to focus attention on security risks to travel associated with terrorism and political groups. Tourism is also affected also by natural disasters such as pandemics, tsunami, earthquakes, floods, volcanoes, and avalanches. A crisis can be defined as any unexpected event that affects traveler confidence in a destination and interferes with the ability to operate normally.

Regulatory & Border Issues

Regulatory issues like visa procedures are seen as hindrances. Difficult visa processes keep the tourists away from some destinations. A number of projects in the tourism infrastructure segment and in the hotel industry are delayed due to non-attainment of licenses and approvals on time.

However, in order to capitalize on the benefits of the tourism sector, the government should aim at creating proper infrastructure, speedy clearances, and make effective policies to regulate the tourism sector and to gain the confidence of foreign tourists.

Technological Drivers of Change

Technology is fast penetrating into all aspects of life. Tourism futures will be determined and facilitated by technology. The Internet has leveled the playing field for tourism marketing. A good website means that small remote destinations can compete equally with the giants of tourism. The fusion of information and communication technologies will allow tourism enterprises to become more efficient and competitive.

Skilled Human Resources

The challenges facing the tourism sector will only be met successfully only by a well-educated, well-trained, bright, energetic, multilingual, and entrepreneurial workforce who understands the nature of tourism and have professional training. High quality of professional human resources in tourism will allow enterprises to gain a competitive edge and deliver added value with their service.

A high-quality tourism workforce can only be achieved through high standards of contemporary tourism education and training. Tourism education and training involve the communication of knowledge, concepts, and techniques that are specific to the field of tourism, but which draw upon the core disciplines and themes of areas such as geography, finance, and marketing.

The futures of tourism are exciting and tourism is a difficult sector to predict. Each of the drivers of the future that we have outlined above is influential in its own right, but when combined they deliver a powerful force shaping the futures of tourism.

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