A Pestle Analysis of Tourism Industry

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1.1Using the PESTEL framework, identify and discuss the key factors in the macro environment that influence the tourism industry. Political:
A large influence on the tourism industry can be the stability of government. If the government in unstable it can be viewed as dangerous and unpleasant to visit. This can have a huge impact on that countries tourism numbers. Some governments also choose to make shopping tax-free for tourists, as tourists have the right to claim back VAT (Value-Added Tax)/GST (Goods and Services Tax). By making shopping in foreign countries tax free it has attracted tourists to these countries. As stated in case one terrorist attacks in 2001 had a huge impact on the tourism industry. People were worried for their safety so were much more subdued to travel. Therefore it has been important that the government implemented tighter security and immigration laws. Economic:

Exchange rates can have an impact on tourism, as when currency strengthens or weakens it can affect spending overseas. For instance when the British pound is strong against the U.S dollar it influences Britons to travel overseas to the US, as they get more for their dollar. However it has a negative effect on UK tourism as the Americans are put off travelling to the UK and instead look to holiday in locations within the US (The Guardian, 2007). With the British Pound still being strong against other currencies this is relevant to the Tourism Industry today. (Rates List, 2012) Interest rates can too have an effect on the tourism industry. If interest rates increase payments to loans also increase, therefore people who have loans consequently have less disposable income. With less disposable income people are less inclined to spend it on luxury items, like holidaying. However, in the current state interest rates in the UK are expected to stay low (0.5%), due to the on-going recovery from the Eurozone crisis (BBC, 2012). Furthermore with the current economic recession people...
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