Tourism Industry Report

1) Introduction: Tourism is an integral part of global economy. As countries have

increasingly opened their borders in an effort to be part of global integration, tourism has
become source of substantial foreign exchange revenue for various economies.
Tourism has also taken significant part in socio-economic development through its
employment generation potential. A prominent characteristic of this industry is the potential
to create backward and forward linkages which are both strong and diverse. This stems
from diversity of allied sectors which are part of this value chain.
2) Value Chain of the Industry:

Food &
Travel Planning Transport Accomodation Excursion
Shopping

Excursion and
Travel Agents Airlines Hotels event Restaurants
operators

Tour Fun &

Shipping Lodges Food Joints
Operators Recreation

Camping Local
Self Planning Rail Local Markets
Places Attractions

Cultural Shopping
Road Home Stay
Groups Centres

3) Key Drivers:
Revenue & Growth: The global travel and tourism industry
was valued at USD 7,581 Billion in 2014 (10.0% of GDP) and
was forecasted to grow by 3.8% in 2015. The global tourism
industry is further envisioned to witness a year-on-year (Y-O-
Y) growth rate of 3.9% and reach USD 11,382 Billion (10.6%
of GDP) by 2025. The revenue generated from visitor exports
is also projected to upsurge from USD 1,384 Billion in 2014 to
USD 2,141 Billion in 2025, exhibiting a CAGR of 4.0%.

Total investment on global travel and tourism sector is anticipated to swell from USD 814
Billion in 2014 at a year-on-year (Y-O-Y) growth rate of 4.7% to reach USD 1,336 Billion in
2025. ( Research Nester, 2017)
Margins: Margins vary widely across the value chain. Luxury customers are willing to pay
premium margins for service and quality. (Yourbusiness Azcentral)
General Margin Range
Travel Planning >20%
Transport 5-6%
Accommodation 20-25%
Tours 40-50%
 Tourism Industry Report
4) Key Market Segments:
Type Purpose of Travel Geography

International Adventure North America

Domestic Religious Latin America
Medical Western & Eastern
Business Europe
Special Interests Asia-Pacific
Middle East and North
Africa (MENA)
Rest of the world

5) Porters Five Forces:

The threat of entrants Requirement of low skilled labour and High Capital
(Low to Medium) Ease in access to distribution channel
Cost Advantages / Economies of Scale
Government rules / policies
Power of Suppliers (Low) Availability of multiple suppliers
Low cost of switching
Organised players have huge power in price negotiation
Power of consumers Low switching cost for fragmented/independent buyer
(High) Lack of brand loyalty due to availability of multiple options
Price sensitivity plays an important part in consumer
decision
Threat of backward Integration
Luxury segment is willing to pay for premium quality &
service
Threat of substitutes Low threat due to absence of substitutes to tourism
(Low) Improvement in communication channels, lowering travel
prices and increase in disposable Income
Competitive Rivalry Highly fragmented industry
(Medium to High) Threat of backward integration
Low costs for small competitors

6) Key Industry Trends:

Rise of per capita income in emerging countries.
Decreasing cost of Airline Travel
Improvement in communication channels
Increase in countries with on arrival visa
Increasing travel preference among millennials.
Rise of photography, cultural, culinary and adventure tourism
Increase in solo travellers

7) Relevant Current Affairs:

US travel ban on Iran, Libya, Somalia, Sudan, Syria and Yemen
Impact of Brexit on European Tourism
Civil Unrest in Turkey and Middle East
Tourism Industry Report
References:
1) Research Nester. Retrieved from http://www.researchnester.com/reports/global-

tourism-industry-market-analysis-opportunity-outlook-2021/109

2) Yourbusiness Azcentral. Retrieved from http://yourbusiness.azcentral.com/profit-

margins-tourismrelated-businesses-10110.html