PESTTG Analysis

PESTTG Analysis The tool we use for understanding the macro-environment (big picture) in which we operate.

The Big Picture

PEST Political Economic Social Technical Megatrends Globalisation

Political

Critical Success Factor Your main Critical Success Factor is your ability to: COMPLY WITH THE RULES

Political ecological/environmental issues – kyoto protocol current legislation host market future legislation international legislation regulatory bodies and processes government policies ADS (Approved Destination Status) government term and change trading policies (FTA’s) funding, grants and initiatives home market lobbying/pressure groups international pressure groups wars and conflict

http://www. eturbonews http://www.eturbonews.com/8828/tourism-and-politics-collide-thailand-and-fiji

Rules of the game You must understand government policy relating to your industry Most policy is discussed for months and sometimes years in advance You going to monitor these potential changes that could seriously affect the viability of your business

Economic Environment

Economic home economy situation overseas economies general taxation issues taxation specific to product/services seasonality/weather issues market and trade cycles specific industry factors market routes and distribution trends customer/end-user drivers interest and exchange rates international trade/monetary issues

Burton’s Four phases of Tourism Participation Economic Developments Tourism Participation ONE Mainly subsistence-based and pre-industrial. Rural, Agrarian. Large Gap between poor masses and small elite. No mass participation in tourism. Elite travel to domestic and international destinations. TWO Industrialising Rapid Growth of urban areas. Growing middle class Widespread participation in domestic tourism . Increased scope of international tourism by elite. THREE Almost industrialised. Population mostly urban. Middle class becoming dominant. Mass participation in domestic tourism, and increase in short haul international tourism. Elite turn towards long hall international tourism. FOUR Fully industrialised ‘high tech’ orientation Mostly urban. High levels of affluence throughout the population. Mass participation in domestic and international (long haul and short haul) tourism

Economic Environment The most common approach to the study of economics of tourism is to divide it into two major areas: Supply (destination resources) Demand (people or market)

Supply Movements away from the market equilibrium cause inefficiencies Undersupply of product, leads to high prices and profit loading, with not everyone being able to buy what they wish, frustration Oversupply of product leads to low prices and questionable sustainability, empty rooms, unused capacity, inefficiency of investment

Demand Demand = Motivators x Facilitors Resistance Factors

Economic Factors affecting demand Disposable Income Inflation Interest rates (including Official Cash rates) Employment Foreign Exchange Rates Non-economic Factors Health Time

Socio-Cultural

Socio-Cultural Impacts People and their attitudes are the focus of socio-cultural impacts.

Social lifestyle trends demographics consumer attitudes and opinions media views law changes affecting social factors brand, company, technology image consumer buying patterns fashion and role models major events and influences buying access and trends ethnic/religious factors advertising and publicity ethical issues trinketisation overcrowding corruption

Technology

Technology

Technology Scan and evaluate horizon looking for changes in technology that will enhance business More to technology than just computer technology Think faster, lighter, stronger, Think of how you can make your customers ability to book easier! If you aren’t innovating I bet your competitors are!

Technological competing technology development research funding associated/dependent technologies replacement technology/solutions maturity of technology manufacturing maturity and capacity information and communications consumer buying mechanisms/technology technology legislation innovation potential technology access, licensing, patents intellectual property issues global communications research and development

MegaTrends

Advancements in Communications Internet Smartphones Tablets Laptops Wi-fi Accessibility Viral marketing Blogs Forums Youtube

Eco Tourism ENVIRONMENTAL PROTECTION Protect natural assets Conserve resources Maintain cultural assets Protect lifestyle Monitor Impacts Set limits to change

Aging Population Over 50% of the discretionary spending power boomers accounting for about 80% of all leisure travel 10,000 Baby Boomers will reach the age of 65 every day for the next 18 years

http://www.youtube.com/watch?v=bu4v1F2LwpM

Globalisation

Globalisation International Competition Legislative requirements across Borders Passport and Visa obligations Diversity of staff Cultural misunderstanding Company structure

Using PEST to develop strategy Change type (PESTTG) Nature of change Impact implication Market driver Key success factors for winners Strategy response

Using PEST to develop strategy change type nature of impact implication market driver key success factors for winners strategy response political Increased media attention on industry behaviour Leading to consumer distrust Consumer backlash leading to consumer ‘power’ Need for a ‘trusted’ positioning in the market Build this key customer value into brand social Overcrowding Loss of enjoyment/quality experience Reluctance to travel Personalised service Build customer loyalty by introducing delight factors economic Fluctuating foreign exchange rates Insecurity around pricing structure for client Preference for USD as a basis for transacting Factor in an allowance for FOREX fluctuations Sell on value proposition with dynamic pricing technologY Increased use of internet to research product (inc handheld device) Clients are knowledgeable on destination Interactive travellers Increased need for authenticity Deliver well rounded product that focuses on quality product and interpretation MEGATRENDS Babyboomers retiring Increased length of stay. High service levels demanded Slower paced tours Relaxed pace. Educated guides Trained in in health assistance GLOBALISATION Blurred borders for litigation Should something go awry, which set of legislation applies Americans are litigious by nature Clarity on booking conditions Transparency of booking terms and conditions outlined during sales process Using PEST to develop strategy