Analysis of the UK Package Holiday Industry and its Environment

Essay from the year 2016 in the subject Business economics - Miscellaneous, grade: 78%, University of Warwick (Warwick Business School), course: Environment of Business, language: English, abstract: In this paper, I will analyse the development of the UK package holiday industry between 1974 and 2015. This entails an analysis of the industry structure in both years seen from a Porter's 5 forces view, a detailed explanation of macro environmental causes of this development as well as an illustration at Thomas Cook.

The major changes in the industry structure are significant increases in buyer- and supplier power, in threat from substitutes as well as in rivalry within the industry. This is majorly triggered by changes in the macro and meso environment:

(1) The advent of the Internet and digital revolution opened up new distribution and information channels, shifting the power towards buyers and suppliers, as well as new possibilities in sophisticated data collection and analysis.
(2) Growing intercultural experience of Britons triggered a shift in preferences towards individualised travelling.
(3) A rising awareness of issues concerning society's wellbeing has started to become a concern in travel and will become more important in the future.
(4) A number of deregulations have acted as catalysts for the globalisation of the package holiday industry.
(5) Rising macro environmental worries, political unrest and natural catastrophes have led to the recovery of the industry after years of decline due to the blossoming of independently organised holidays.
(6) The emergence of budget carriers has enabled customers to organise their own holiday at a lower price.

These environmental changes have caused Thomas Cook to change in 4 main areas since 1974: (1) they have become part of the Thomas Cook Group, (2) they pursue a digital innovation leadership and development of multi channel distribution, (3) they differentiate their products by high flexibility and quality guarantee through concept and partner hotels, (4) they offer superior service by being in close dialogue with its customers and staying in touch in the post-holiday period to learn from customers' critique.