The tourism industry has been growing for decades, and shows no signs of stopping. As individuals from across the world have more money to spend than ever before, and get to see the globe’s many wonders through social media, it’s no surprise they want to travel. But is the outlook for the tourism industry really as bright as it seems?
We’ll answer that question and others in this article using PESTLE analysis, which reviews the Political, Economic, Sociocultural, Technological, Legal, and Environmental factors influencing a business.
Here are the Political factors affecting the tourism industry:
Thanks to many governments’ decisions to open up borders to foreigners, it’s easier than ever to travel to new countries. While some countries are still difficult to access (often for political reasons), the vast majority of destinations can now be visited by tourists from all around the world. In many cases a visa of some sort is necessary; however, the process of applying for a visa has been expedited in many countries, in part thanks to the use of technology.
Political stability is a major factor in the success of tourist destinations. Travelers are naturally curious to visit all corners of the world, and they can only really be swayed by the threat of danger. Most popular tourist destinations are considered safe. However, there are a number of culturally-rich destinations that would be popular tourist spots if not for political instability. Examples include Syria, Iraq, and recently Hong Kong.
Another Political factor impacting the tourism industry across the world is that of tax incentives. In many countries, tourists are able to claim a tax refund on products purchased during their trip upon departure. It’s rarely the case that these tax incentives are the only reason for a tourist to visit, but there is no doubt that they are an “incentive” for all tourists!
Here are the Economic factors affecting the tourism industry:
Rising disposable incomes
Across the world, incomes are rising. As the world economy grows, individuals are able to earn more and more. With living expenses growing nowhere near as quickly, many of the world’s citizens have more money to spend than ever before. This has lead to an increase in the use of electronic goods (which are increasingly accessible also thanks to lower product costs), but also results in more individuals being able to travel. This is clearly a positive factor for the tourism industry.
The sharing economy is the name given to the business trend whereby individuals exchange goods and services directly with one another using facilitating services such as Uber and Airbnb. As you may have noticed from those two examples, the rise of the sharing economy is changing the way we travel. With services like Uber offering a reliable way for tourists to catch rides around the world, and Airbnb offering a cheaper alternative to traditional travel accommodation (mainly hotels and hostels), the sharing economy is making travel more accessible, but hurting some of the industry’s corporate providers.
Here are the Sociocultural factors affecting the tourism industry:
There’s no doubt about it: travel is fashionable. With the rise of social media, individuals now have a constant, online presence, and they want to use that to impress. The social popularity of travel is causing individuals to travel when they might have otherwise stayed home. Of course, this movement is a positive one for the tourism industry, but may not see sustainable growth if society moves away from the use of social media.
Another positive Sociocultural factor for the tourism industry is that of racial acceptance. Individuals from around the world are increasingly accepting of those of other races and religions. This makes travelling a much more comfortable experience, since tourists don’t need to worry about being profiled or targeted as a result of their skin color, faith, or whatever other personal traits they may have.
Here are the Technological factors affecting the tourism industry:
One of the biggest Technological factors influencing the tourism industry is the development of transport. Not only do travellers have more transportation options than ever before — especially with the advent of airplanes — but they are cheaper (and faster!) than ever before. Buses, trains, and planes are also more comfortable than previously, and feature new amenities such as WiFi connectivity or charging ports.
We couldn’t find any Legal factors affecting the tourism industry.
Here are the Environmental factors affecting the tourism industry:
Perhaps the biggest environmental factor influencing the tourism industry is the pollution created by transportation mediums such as buses, trains, and — more so than others — airplanes. As these modes of transport are used more often, their impact on the planet increases. All three result in the creation of large amounts of pollutants (such as carbon dioxide) which contribute to global warming and other environmental phenomena.
In addition to pollution on a global level, tourism can cause pollution on a local level. In some cases, tourists may be less respectful of a destination than of their hometown, causing them to litter and/or contaminate. Whether it’s discarding of bottles in the countryside or using regular shampoo in lakes, this is an unfortunate side effect of the tourism industry.
PESTLE Analysis of the Tourism Industry: Final Thoughts
There are a number of positive factors impacting the tourism industry. Borders opening up, stable governments, and tax incentives are all Political pros for tourism. What’s more, Economic changes like growing disposable incomes and the rise of the sharing economy are making travel more accessible. Sociocultural factors such as social media pressure and increased racial acceptance are also aiding the tourism industry, as is the Technological factor of improved transport.
The only negative factors this PESTLE analysis has uncovered are Environmental ones. Unfortunately, tourism has a negative impact on the environment on both local and global scales. If the industry can tackle these issues, growth should show no signs of slowing down!