Spain is located in South-western Europe; Spain borders the North Atlantic Ocean, the Mediterranean Sea, and Pyrenees Mountains. Spain is famous for its spectacular festivals for example, Bull fighting, carnivals, fiestas, delicious food, stunning beaches and glorious weather. Spain has the fifth largest economy within Europe and being the twelve large economy in the world. (Spain Country Brief) Spain is the biggest producer of Olive Oil and third biggest producer of Wine. Spain has also got the second biggest tourism industry in the world, which is Spain’s main source of income in terms of economics, which contributes nearly 11% of Spain’s GDP and employing around 2million people (Economy Watch).
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A definition of tourism is “â€¦social, cultural and economic phenomenon which entails the movement of people to countries or places outside their usual environments for personal business/professional purposes” (UNTWO: Understanding Tourism). Tourism is one of the largest industries in the world. Due to the development of jet aircraft this has allowed destinations in many countries to be developed across the globe, allowing tourism to grow significantly. Today people have more spare leisure time so people place much more value on holidays, travelling and experiencing visiting new destinations. (S, Page & J, Connell, 2006).
Definition of Tourism Demand:
A definition of tourism demand from an economic approach is “â€¦The schedule of the amount of any product or service that people are willing and able to buy at each specific price in a set of possible prices during a specified period of time” (Cooper, et al, 1998). It is important to monitor tourism demand because it is what can make a business suffer. For example, it is the total amount of people which stay in accommodation, how many people book flights, tickets into attractions, car hire, insurance and other ancillary service. If the demand is low and organisations don’t monitor the demand then the tourism organisation can suffer. An example, is the tour operator Thomas Cook when they had to close around 200 stores and cut fleet because they had a net loss of £521(million) (Bloomberg), Thomas Cook has also had to cut fleets to several destinations and cut five Spanish Hotels so they have had to buy thousands of seats and link with Easy Jet to make profit, they didn’t monitor the demand of tourist therefore are suffering now.
Environment Analysis (PEST):
The term PEST analysis has been used to describe the MACRO environment the PEST analysis includes political, economic, social-cultural and technological factors (D, Jobber), these factors are uncontrollable within organisations and the demand for travel. For example, political factors can determine whether people travel such as, foreign currency restrictions, regulations including paid holidays, pensions and working hours. Some economic factors that may result in demand for travel to be decreased include disposable income and employment, social-cultural factors include, cultural differences, social/cultural class and some technological factors include improvements in transport, online on how people now book holidays. These factors determine whether a tourist will want to travel, which again they may have no say in whether they can travel.
An example from the PEST analysis that can determine whether a tourist travels to Spain is exchange rates and recession (under economics). The recession has recently been in the media about the recession in Spain. Spain and Greece are upon the countries in Europe that are being affected by the recession the worst which are leading to riots in many towns/cities within Spain. According to (The Money Updater Article), people in Spain have been forced to sell their homes or being evicted due to people of Spain not paying their bank loans due to rising unemployment and a reduction in benefits. In Spain it is said that 38 people have been arrested and 64 seriously injured. (The Money Updater). With riots occurring frequently this is going to put many tourists off travelling to Spain as it may be seen as a dangerous place to visit. Tourism is Spain’s second biggest industry accounting for 11% GDP, so Spain has to try and minimise political issues, so tourism can still be an appeal for inbound tourist.
Another reason which can determine whether tourist demand will increase or decrease is exchange rates. As many countries suffer due to the recession, many people do not have much disposable income than before so therefore exchange rates can determine whether a person will travel to Spain. In this economic climate the pound/euro against the dollar is weak, so this may put people of travelling to Spain and will opt to travel to America where they will get more value for money. When the pound and Euro are weak prices in everyday items increase including food/drink and people don’t want to pay over the odd prices. When the pound and Euro are strong then people will travel to Spain because things become cheaper and it will make people want to travel. If people from the UK want to travel to Spain and exchange GBP and Euros of £250.00 this will be converted to 307 Euros (XE: Currency Converter) the pound and euro is weak but travelling to Spain you still get more than you would travelling to the UK for a holiday where if you convert 250 Euros to GBP you will only get £203 back which will not be appealing for tourist as they have lost money, so this may well be appealing for tourist wanting to travel to Spain because there money will go further.
Key Determinants of Tourism Demand to Spain:
There are many different types of determinants that determine whether a tourist will travel that link to the PEST analysis these include, price such as, recession, disposable income, inflation and exchange rates, transport development, online development, cultural factors, government restrictments such as VISA policies.
The higher the product/service is the consumer is not likely to purchase and the lower demand is to travel, but the lower the price of the product the higher the demand will determine travel to that Spain.
There are different types of demands which can determine whether a person will travel to Spain these include; effective or actual demand, these are tourists that actually do travel and can easily be measured. There is also supressed demand it is section of the population that do not wish to travel for some reason, even in the 20th century few people do not travel to international destinations but many people do participate in domestic tourism. There are two different types of elements these include potential demand; this could be mean that a person will want to travel to Spain or other destinations but due to different circumstances such as, not as much disposable income or work commitments they will opt to travel in the future and make plans for the future, but if circumstances change where they may get paid holidays and therefore opt to travel they may go into the effective demand category. Another category can include deferred demand, this considers environmental issues in a destination such as, lack of accommodation, weather conditions or terrorist activity, and those in the differed demand may opt to travel elsewhere or in the future. Finally, there is a demand called; no demand, where people just don’t have no desire in travelling at all now or in the future, this can link to different social classes on for example the older generation may not have no desire to travel because of the cost of travel insurance and other expenses. (Cooper, et al, 1998)
Recession is a key determinate that determines whether a person will travel to Spain. Why this effects people to travel or not to travel is because this may cause a person to be made unemployed or salary cuts or inflation rates (everyday items increasing) If the recession is effecting a person they may make future plans to travel when more paid holidays will be given or they have more disposable income. According to (ETN Global Travel Industry News), in 2009, Spain’s tourism declined by 10% and in 2008 30.2million people visited Spain but this decline by 10.3million in 2009 due to the recession and people not have any spare disposable income. Domestic tourism did increase, with more people taking frequent holidays and not travelling abroad, this may also be to do with recession too.
Another factor that can determine whether a tourist will travel is weather conditions in Spain. The recession has hit people hard around the world, but luckily Spain has good weather, in the Spanish Islands such as Lanzarote where the weather is good all year round, because Spain has a good climate reaching highest temperatures of around 27-30 degrees in some parts of Spain which is appealing to tourists coming from countries with cold climates such as the UK, so they will pay for tourism product because of the climate.
Another reason that can determine whether a tourist will travel to Spain is Travel TAX, this links to political factors on the PEST analysis. According to (BBC News, 2012), Tourist travelling to Spain may face extra Airport TAX, passengers have been emailed which say they have to pay extra additional costs even if they paid for their holiday well in advance. Spain have done this to cut deficit, but this is a factor that is definitely going to put tourist of travelling to Spain, airport tax is already expensive, tourist will opt to travel to Spain in the future or travel elsewhere. The budget airline Ryan Air is also considering cutting fleet to some of Spain’s airports.
Another factor that determines whether a tourist will travel to Spain is transport development. The development of budget airlines has allowed people from all walks life rich or poor to travel there preferred destinations extremely cheaply. This will appeal to tourist as they can get flights extremely cheap to luxurious locations in Spain.
Motivation of Demand to Spain:
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