Competitors Of Tui Based On Market Share Tourism Essay

Competitors Of Tui Based On Market Share Tourism EssayThe task of the following assignment is taking a strategic fit for a pack get along pass company. A sheaf holiday company is defined as one that offers minimum of travel and accommodation in a single package.One company that operates internationally and offers minimum package of travel and accommodation is TUI locomotion.TUI is the worlds leading international leisure travel company operating in quaternion different sectors (tuitravelplc.com)The main competitors of TUI based on Market share areCarlson Wagonlit TravelThomas Cook plc.Travelport LtdVision StatementOur vision is Making Travel Experiences Special(tuitravelplc.com)TASK A Market Environment AnalysisIn gild to analyse the foodstuff purlieu proper analytical tools should be electPESTLE Analysis for Macro EnvironmentPorters five forces for Micro EnvironmentPESTLE AnalysisPolitical FactorsChanges in the taxation policy of the government in UK, such as increase in VAT percentage by 2.5% may hold up a negative impact on inbound touristry in UK as the prices of commodities allow for rise. Also, 24% Britishers claim that increase in VAT will also lead to expensive staycations (Casal 2011)Unstable Political environment can seriously impact the touristry industry of a nation as the travelers fear for their safety and tend to avoid that nation. Such as late Political rising in mid east has lead to 50% cancellations in Arab nations (Zablit 2011).Security and safety concerns have major impact on tourism industry. Terrorist attacks of 9/11 in US led to 10% pivot in demand for travel and tourism (Bennett and Barry n.d.). Such attacks also raise a question on national security of the country and dampen the tourists confidence.Economic FactorsRecessionUKs plan to emerge out of recession may just be stretched further as the recent political uprisings in Middle East and disaster struck Japan may have prolong effects on the world economy, affecting the to urism industry as well.In measures to keep household budgets low, families are looking into more of domestic shore holidays, also tell as staycations. In year 2009 there was a decrease by 14% in overseas holidays in UK, whereas the domestic shore food market roseate by 5% (Mintel Report 2010).Currency FluctuationsIn the year 2008 there was resistance amongst the US visitors for the UK due to strong Pound. Against the dollar, Pound was at two-year low. (Ashby 2008) flavour at the table 1, which shows Dollar strengthening against the pound in the recent years, may attract tourists from US. Furthermore, strengthening of Euro and Dollar can be stated as a cause for escalated interest in staycations and a concern for outbound tourism from UK.Table 1 Currency Prices for last 5 years, with base specie being Pound ()(Source XE.com)Fuel PricesYearEuroDollar200669 p57p200768p51p200876p49p200992p71p201090p66pThe Oil prices rose to $120 per barrel in February 2011 due to political uprising in Middle East and have left airlines worried. International Airlines Group has decided to cut back by vanishing less often. IAGs CEO verbalize if the fuel prices do not recede the ultimate effect would be on fares (Milmo 2011). This would lead to increase in packaged holidays prices.Social FactorsDemographicsMintel report 2009 suggests that the celestial latitude in average households is project to continue whereas 5% harvest-home in 1-3 mortal households. It states about 48% of 1 member family went on a holiday as compared to 68% of marries, 60% of three person and 70% of four households. (Mintel Report 2010)Table2 Showing % change in households in UK.(Source Mintel Report 2010)By 2031 it is projected that the single households (mainly people over 55) will comprise of 18% of the total households in UK. and then it would be a major market for the package operators (Communities 2009) health concerns.200420092014% Change% ChangeMMM2004-092009-14One-person households7.68.358.89 .95.42 person8.969.5410.026.553 person3.953.974.150.54.54 person3.33.313.330.30.65+ person1.671.651.64-1.2-0.6Total households25.4826.8127.935.24.2Continued concerns over health and hygiene are seen amongst UK residents. The outbreak of Foot and Mouth disease in year 2001 led to 16% fall in visitor expenditure in UK leading to negative images of Britain as a holiday destination (Pasty 2003). But, with the upcoming Olympics 2012 and Royal Wedding in 2011 will lead to high volume of tourists visiting UK.Ageing Population.As per the National statistics organization (2010) there were one in five people of retirement age in the UK. As the nation is ageing there will be an extra cost for the companies who offer pension schemes to their employees so that their staff lives longer (Oxford University infatuation 2007).Technological FactorsInternetIn UK there were 20 million Internet subscribers out of 27 million households. High Level of Internet penetration is a key contributing factor to online travel retailors performing better. Online sales of travel retail product represented 34% of the total sales. This also has led to ferine competition amongst the players as the customers are looking for cheap vacation packages, third most important factor when selecting holiday package (Euromonitor)Better Technologya la mode(p) technology advancements in sectors such as engineering, airline industry, transport, infrastructure etc. such as coming of luxury passenger planes such as Airbus A380 and Boeings 787, Eurostar via Eurotunnel have make cross border travel easier and swifter than ever.Legal FactorsEmissions Trading SchemeThis scheme was presented in the year 2003 for EU in-order to curb carbon emission. In 2008 amendments were make to this scheme, including the aviation activities as well. It means the aircraft operators will be subject to a cap and will have to pay allowance to cover their emissions. This could have an upward impact on the prices of holiday packages ( Euro Monitor).Open Skies AgreementSigned between EU and US in the mid 2008 allowing and airline from the EU or the US to any place between EU and US. (Euro Monitor) This allows the customers to fly with their choice of airline and thus can help reduce costs because of competition amongst the operators.Environmental Factorshonorable ConsumerismThe Ethical Purchasing Index states that the ethical purchasing has grown phenomenally with total market valued at 30million. Eco Holidays, Fair trade holidays have experienced exceptional growth due to the rasing concern regarding the environment amongst the people (Mintel Report 2005).Green InitiativesIn todays world it is impossible for the travel and tourism industry to brush aside the growing concerns over environment. In a survey in year 2002, 85% of the people said it is important their vacation does not hamper the environment. receivable to this fact the package operators are aligning themselves to become environment friendly (Euro Mo nitor). Such as Thomas cook has now started to highlight about their work meeting responsible tourism criteria (Mintel Report 2005)Porters Five forcesCompetitive RivalryThe four major players in the market (Thomson, MyTravel, First-Choice and Thomas Cook) have, for number of years, jostled each other for bigger market share and profits have proved to be volatile (Evans et al, 2003). The major package holiday players target different segments in the market such as, offering luxury vacations, adventure vacations etc. with some uniqueness as well. Package operators such as Thomson introduced their own low cost airline- Thomson fly and dynamic packaging where customers can book their accommodation and flights separately (Lueck 2005)The level of customer supporters affect when choosing a company, if one offers better customer service than others it helps in retaining customers. Therefore there is intense rivalry in the industryThreat of New EntrantsThe total expenditure on holidays is expected to rise by tight 22% in 2014 from 2004(Mintel report, 2010) making the tourism industry attractive one because of the market size. Yet, high level of capital investment required targeting big audience and the need to differentiate acts as a barrier to entry. And to add, top 10 companies control 70% of the market. This reduces the price retaliation and keeps the economies of scale high. Findings from Mintel report (2010) states crack awareness plays an important role in package holiday industry and thus can act as a barrier. Therefore panic of brisk entrant is low.Threat from SubstitutesHolidays can have direct as well indirect substitutes, such as instead of spending couple of pounds on a weeks vacation people might spend same amount of money on buying a car or towards house extension. Therefore threat from substitutes if moderate.Bargaining cater of SuppliersSupplier can have high negotiation power over the companies having small market share, but in a market where 4 major players control over 50% of the market there is threat of backward integration. Therefore the bargaining power of the suppliers is lowBargaining Power of buyersCustomers today have the option to book their holidays over the Internet they eye to fetch cheap deals. Regards to this the customers have more choices. But, due to low level of note and lesser substitutes make the bargaining power moderate.Critical Success FactorNew Destinations As per the Mintel report (2010) visiting a new destination has seen highest growth in terms of percentage, 12%. Places that have hot weather, beaches, landscapes, cultural heritage are a major hit amongst various demographics. Therefore in order to have larger market share it is important for the package operators to continuously look to update their offering of destinations.It is important for the tour operators to offer short and long suit haul holidays destinations and domestic places for vacations, as it is the growing market as per the current statistics. (Mintel Report 2010)Convenience In todays technologically advanced world where most of the population is the subscriber to Internet, it is important for travel agents to offer the customers with online booking facility. In UK itself out of 27 million households 20 millions are the Internet subscribers (Euro Monitor). Mintel report (2010) states there was nearly 20% growth in online booking, way more than any other method of booking holidays. Also, a company should be easily searched over the Internet. Therefore the companies should optimize their websites to reach larger audience.Brand Value It is important to persuade customer to buy package holidays. Here, brand comes into the picture. The recent volcanic eruption helped the package operators build on their brand image and capitalizing on what could happen if independent holidays are booked.Green initiatives The growing concerns for the environment amongst the customers (see Environmental factors in PEST) have made travel operators take stock of the growing concern. Thomas cook has now started to highlight in their brochure that their services meet the responsible tourism criteria. (Euro Monitor)