Strategic Planning for International Travel - Essay Example

?Strategic planning for international travel Table of Contents Introduction 3 Prevailing UK Travel 4 Importance of International Travel for UK 6 Importance of Infrastructure for International Travel 7 Public-Private Partnership for UK International Travel 8 Conclusion and Recommendation 10 Reference 12 Introduction Globalisation has brought many significant changes with itself. It has influenced the entire human thought process and their daily activities. It is considered to one of the most crucial occurrences in modern age that takes place gradually with time. Benetti has defined the globalisation as a process that is “based on an unprecedented development of technology, which dramatically has improved the quality, the speed and security of transfer and mobility of people, products, capital and information across geographical borders” (Benetti, 2003, p.35). This definition covers the entire necessary areas for development. Primary focus of this paper is on international travel and it is major area that has brought significant developments in human life. Technological advancements lead to facilitate international and domestic travel industry. Transportation systems between two different countries has become easier and faster. Growing business activities also intensified the demand of international travel services. Moreover, enhancing the economic condition of global people has caused an increase in their disposable income, and their lifestyles have changed significantly. Their spending powers have grown up and hence, they are able to afford high cost leisure expenses. Therefore, it can be defined that rapid development of international travel industry is due to three prime reasons i.e. technological advancement, increasing business activities and enhancing economic condition of people. This paper will attempt to present a discussion on international travel for UK, and the primary objective is to offer a set of plausible and actionable strategies that will help to bring further improvements in international travel for UK. In this respect, an analysis on UK travel industry and importance of international travel will be presented followed by a discussion on the requirement of infrastructural development for international travel. Public-private partnership (PPP) is a joint effort made by government and private organisation to bring infrastructural developments. PPP is also very important and popular for UK travel infrastructural development and hence, its importance will be discussed. Finally, based on analysis and discussion a set of recommendations will be proposed by summing up the major findings. Prevailing UK Travel Most of the European countries belong to the category of developed nation, and the countries like United Kingdom (UK), France, Germany, Italy etc are the major economic powers. As this paper deals with the international travel of UK, the focus will be on this country. European nations are economically and technically developed and hence, their transportation and travel system are quite advanced. UK is one of the leading financial powers of Europe. Its GDP as per purchasing power is nearly $2.189 trillion and per capita GDP is recorded $35,100 during 2010 (CIA, 2011). After the financial crisis of 2007-2008, its economic growth has experienced a steep downfall. However, UK’s economy is now at its recovering stage and government is trying to bring further developments by encouraging trade and business. Tours and travels is an important aspect for the growth of trade and business and hence, the government is trying to improve its infrastructure and technology for availing better transportation system. The services industries are playing very crucial role in UK as 75% of its GDP is contributed by these services sectors. UK’s services industries include a number of sectors like transport, communication, financial, distribution, distribution, tourism etc (U.S. Department of State, 2010). Increases trade and business activities in UK have necessitated major infrastructural and transportation developments. Currently, UK government has established 505 airports and among which 306 airports are with paved runways and 199 airports are with unpaved runways. The country also owns 11 heliports which are mostly used for private and defence purposes. Moreover, it has also focused on its other mode of transport like railways, roadways and waterways. Railways and roadways of UK have been extended to 16,454 km and 394,428 km respectively till 2010. The waterways of UK are also very important mode of domestic and international transport. The extension of its waterways is nearly 3,200 km and 620 km are used for commercial purposes. Besides, it also owns 527 merchant marines that include multiple cargos and carriers for commercial and passenger usages (CIA, 2011). UK international transport industry primarily includes air travel services providers, and tourism industry plays very important role in this respect. Tourism industries can grow based on different purposes like medical, business, leisure, entertainments, sports etc. In this process, outbound and inbound tourists are very important. In recent years, there has been a decline in overseas visits to UK and abroad visits from UK. The following graph represents the trend of international travel. Figure 1: International Travel (Source: Office for National Statistics, 2010) As per the above figure, there has been a significant drop in inbound and inbound tourists. During 2008, abroad visits were recorded nearly 69.0 million and by the end of 2009, it fell to 58.6 million. On the other hand, the number of inbound tourists in 2009 was 29.9 million comparing to 31.9 million in 2008. This drastic fall in international travel was a result of financial crisis that reduced the purchasing power of UK as well as other developed countries. Business visits faced the biggest drop as “fell by 23 per cent among UK residents going abroad and by 19 per cent among overseas residents coming to the UK” (Office for National Statistics, 2010). Importance of International Travel for UK International travel has a great importance for the development of local as well for the entire economy. There are certain areas that are directly interrelated with the international travel. International trade, tourism industry, health care industry etc are the major industries which require a better international travel system within a country. Besides, international travel industry also offers a significant amount of employment that leads to enhance the purchasing power of people. In case of UK, the country has recently suffered from the financial recession and for its rapid recovery, the government frames and implements proper international travel strategies that strive to bring major economic development. International trade is a very critical area for bringing growth and development within a country. In this respect, the UK air-travel industry is very essential. Government has encouraged the competition level in airline industry, and the leading players of this industry are competing on low cost carriage services. EasyJet and Ryanair are two major European air travel companies that primarily offer low cost services. In order to counter low cost competition, other air travel companies are also aiming to achieve low cost leadership. Recently, British Airways has entered into a partnership with UK Trade and Investment (UKTI) for enhancing the small and medium scale enterprises. As per this partnership deal, British Airways offers “15% discount off the total cost of flights on all cabins and classes of travel, enabling UK SMEs to develop their business potential across the globe” (UK Trade and Investment, 2010). This has also benefited the tourism and international relation of UK. Importance of Infrastructure for International Travel In order to bring development in UK’s international travel, infrastructure is the most important requirement. In case of air travel industry better infrastructure is the prime essence and airline industry is the key player for better international travel and transportation system within a country. Airline services are also very crucial for regional development. The domestic trade and business are also highly dependent on airline services and therefore, point-to-point linkages among various regions are inevitable. For establishing better airline transport, airports infrastructure must meet the necessary requirements for offering cost benefits and flawless services. UK airline industry primary follows two types of services i.e. point-to-point and hub & spoke operation. Generally, airports of UK enter into commercial partnerships with air travel providers. In case of hub & spoke operation, airport must have better infrastructure as it requires better baggage services, restrooms and other services for assisting passengers to transfer to other aircrafts. On the other hand, point-to-point services do not required higher level of services. Therefore, airports must design their infrastructure supporting airline companies operations (Office for Fair Trading, 2006). International travel related infrastructural developments have led to bring multiple regional developments in UK. For example, UK’s Port of Southampton has been a major driver for increasing jobs, economic growth, and major investments. The better infrastructural of this port backed on renewable energies that help to offer green jobs (Parliament UK, 2010). Public-Private Partnership for UK International Travel Public-private partnership (PPP) can simply be defined as partnership between the government and private organisation. BBC news defines that “any collaboration between public bodies, such as local authorities or central government, and private companies tends to be referred to a public-private partnership (PPP)” (BBC News, 2003). Therefore, the primary focus of PPP is on collaboration i.e. working together for achieving respective goals. It is considered to be very effective model in bringing growth and development for encouraging trade and business within a country. PPP approaches are very famous for infrastructural development within an economy. Government often follow the PPP models for better technical expertise, financial and other assistance. There are a number of PPP approaches which are followed by government for executing infrastructural related projects. Some of these approaches are “Design-Build (DB)”, “Private Contract Fee Services”, “Constructor Manager @ Risk”, “Design-Build with a Warranty”, “Design-Build-Operate Maintain (DBOM)”, “Design-Build-Finance (DBF)” and “Long-Term Lease Agreement” (Buxbaum et al, 2009, p.8). Major advantage advantages of PPP are listed below. Risks are transferred to them who are capable to manage it efficiently. Specific projects outcome helps to encourage innovation. Private sectors can offer their managerial expertise in completing a project. Competition is encouraged and quality increases. Better technology can be availed for a project. Cost efficiency and times savings are other major advantages. On the other hand, there are also certain major negatives aspects of PPP and these are given below. Sometimes PPP also leads to higher cost of transaction and higher cost of capital. Conflict of interest between the government and private organisation can affect the quality of a project. Selection of inefficient private firms may cause losses and unfavourable outcomes. Hold-up issues can cause major problems relating to negotiations. PPP model approaches are also followed by the UK government for bringing major infrastructural developments in country. Since last 15 years, nearly 25% of the total infrastructure projects in UK have been completed by PPP approaches (Bear, 2011). The UK government primarily follows the public finance initiative (PFI), a popular approach of PPP for carrying out multiple infrastructural projects. In case of airport infrastructural developments in UK, Highlands and Islands Airports Ltd and airport officials has entered into various airport terminal projects. For example, Inverness Airport of Scotland was a result of PFI and this “?9.6m project saw the construction of a new terminal without any public money being spent up-front” (BBC News-a, 2005). Besides, railways are another major mode of transport in UK as it helps to connect the point-to-point destinations in UK. The Departments of Transport, UK has announced a project for high speed rail. The Government has realized success of high speed rails in different countries like Japan, China, France, Spain etc. However, this project will require advanced technology and huge investments (Department for Transport, 2011). In this respect, UK government must opt for PPP or PFI approaches for completion of this project. The above discussions have presented importance of PPP and PFI for UK in its infrastructural developments. The fact is that UK economy is highly dependent on its services sectors and in recent years, the country has not experienced any major industrial developments. However, historical evidences provide an inverse argument as during 18th and 19th century, Britain was the first country of world to encourage Industrial Revolution with help of technological inventions. Currently, UK industries are in stress and very minimum technological advancements have been achieved by this country. PPP is a major tool for UK economy for bringing major infrastructural development with better utilisation of technology. Without PPP initiatives, UK would have remained a developed country in Europe. Nearly 15% of infrastructural projects have been executed through PPP or PFI framework, and in future, UK is trying to involve more in PPP approaches. Without the help of PPP, such advanced infrastructural developments is not possible. Conclusion and Recommendation This paper has presented various aspects of international travel in respect of UK. Currently, UK’s prevailing transportation system’s development has been possible due to growth of international trade and business, and travel and tourism industry. International travel primarily includes the airline industry and railways and it has great economic importance as it leads to enhance the local, regional and international progress. In order to execute major transportation infrastructure projects, PPP or PFI approaches are very effective for UK as government has been following this approach successfully. Therefore, government must formulate better strategies for international travel growth. Some of plausible recommendations are given below. Transport projects must be analysed considering the economic conditions like industrial growth, GDP, balance of payment etc. Infrastructural development must be cost effective and benefited for the population. PPP or PFI approaches are very effective for cost effective infrastructure developments and therefore, UK government should go for this approaches in future. To reduce the transition cost in transport infrastructure projects, time scale and risk hedging process should be implemented for reducing delays and avoiding uncertainties. Communication and promotion in transport infrastructure developments are very important. UK government should focus on communicational and promotional activities. Reference BBC News. February12, 2003. What are Public Private Partnerships?. [Online]. Available at: http://news.bbc.co.uk/2/hi/uk_news/1518523.stm. [Accessed on March 10, 2011]. BBC News-a. June17, 2005. Ministers ground airport PFI deal. [Online]. Available at: http://news.bbc.co.uk/2/hi/uk_news/scotland/4103178.stm. [Accessed on March 10, 2011]. Bear, M. February 21, 2011. Infrastructure spending is key to City success. [Online]. Available at: http://www.cityam.com/news-and-analysis/lord-mayor-london/infrastructure-spending-key-city-success. [Accessed on March 10, 2011]. Buxbaum J. N. et al, 2009. Public sector decision making for public-private partnerships. Transportation Research Board. Benetti, R. 2003. Survival of weak countries in the face of globalization: Puerto Rico and the Caribbean. La Editorial, UPR. CIA. March 1, 2011. The World Factbook: United Kingdom. [Online]. Available at: https://www.cia.gov/library/publications/the-world-factbook/geos/uk.html. [Accessed on March 10, 2011]. Department for Transport. February 28, 2011. High Speed Rail: Investing in Britain's Future. [Online]. Available at: http://www.dft.gov.uk/pgr/rail/pi/highspeedrail/. [Accessed on March 10, 2011]. Office for Fair Trading. 2006. UK airports. [Pdf]. Available at: http://www.oft.gov.uk/shared_oft/reports/transport/oft882.pdf. [Accessed on March 10, 2011]. Office for National Statistics. July 13, 2010. International Travel. [Online]. Available at: http://www.statistics.gov.uk/cci/nugget.asp?id=178. [Accessed on March 10, 2011]. Parliament UK. September 2010. Transport and the economy. [Online]. Available at: http://www.publications.parliament.uk/pa/cm201011/cmselect/cmtran/writev/economy/te76.htm. [Accessed on March 14, 2011]. UK Trade and Investment. March 22, 2010. British Airways. [Online]. Available at: http://www.ukan.uktradeinvest.gov.uk/trade-directory/categories/travel-10788/british-airways-340. [Accessed on March 10, 2011]. U.S. Department of State. December 14, 2010. Background Note: United Kingdom. [Online]. Available at: http://www.state.gov/r/pa/ei/bgn/3846.htm. [Accessed on March 10, 2011]. Read More