Economic factors Flashcards
How does the economy impact businesses ?
The economy impacts how much money businesses / organisations can borrow from banks and how much money they have to invest back into their business to improve / expand.
How does the economy impact customers ?
The economy impacts how much money people have to spend on their travel / holidays.
What is disposable income ?
The amount of money left over from a person’s wages after they have paid tax to all other necessary / essential expenses. The more disposable income the higher increase in travel.
What does economic growth lead to ? (advantages)
A growing economy leads to higher income / wages, higher employment.
What can economic growth lead to ? (disadvantages)
A recession or economic downturn which can lead to a reduction in spending or less / fewer people travelling.
What is currency value ?
The strength or weakness of a country’s currency relative to others which can as a result can affect travel costs.
What does a favourable exchange rate leads to ? (travel costs) (advantages)
It can make certain destinations more attractive to tourists, potentially boosting tourism spending.
What are the economic factors affecting the travel and tourism industry ?
Income levels, exchange rate, fuel / oil prices, inflation, interest rates, employment and unemployment rates, tourism taxes and government policies, global events and crisis, globalisation.
What are some factors that have negative impacts on someone’s disposable income ?
recession, increases the price of essential expenses, people might lose their job as a result of not having enough customers etc.
How can currency exchange impact tourists ? (advantages and disadvantages)
Changes the pricing of holidays (more or less money being spent)
What are positive impacts on someone’s disposable income to the economy ?
They have more revenue to spend in the local economy boosting economic growth and helping to create the multiplier effect.
What causes currency exchange fluctuations ?
Recession / growth, trade, laws, demand etc
How can currency exchange impact on tourism businesses ? (advantages and disadvantages)
The costs of services / accommodation varies depending on the exchange rate.
How does oil prices affect the travel and tourism industry ? (advantage and disadvantages)
A decrease in oil prices means a reduction in ticket prices for aeroplanes, cruises, and therefore increases the demand for travel however an increase in oil prices leads to an increase in holiday pricing and therefore a reduction in holidays as people have less disposable income.
How does government policies impact the travel and tourism industry ?
Tourism taxes can be imposed such as taxes on airfares, accommodation etc and can make destinations more expensive for tourists therefore reducing demand, however there may also be tax incentives put into place to encourage tourism.
Visa taxes that regulate the ease of obtaining visas and the entry requirements for travelers (such as restrictions or tariffs) can influence international tourist flows.
Incentives and Support means that governments may offer incentives to encourage travel and tourism, such as promoting specific destinations or funding marketing campaigns.
