The tourism industry has been one of the most resilient industries till date.The ability to bounce back from factors eg the pandemic, political instability and now inflation, is incredible .This sector has proved it’s ability to recover from huge losses despite the enemies of progress it has to face.

tourism industry inflation

positive effects of inflation on the tourism sector

1.Higher Profits as the services are sold at higher prices. Inflation leads to increase of prices on the tourism goods and service in turn it benefits the industry by giving more profits

2.Better Investment Returns since investors and entrepreneurs receive incentives for investing in productive activities.

3.Increase of revenue from international tourists who visit. with inflation the revenue gotten from the international tourists is a great deal in helping the tourism industry grow

4.Helps to increase production of services and tourism goods.When the economy is not running at capacity, meaning there is unused labor or resources, inflation theoretically helps increase production.More money translates to more spending, which is equal to more aggregated demand. More demand, in turn, triggers more production to meet that demand.

5.Increased income and employment.Retailers in tourist areas often raise their prices in the knowledge that they will continue to find a market among affluent tourists. Inflation in tourist destination areas is also caused by land values, with tourism generating additional demand for land. The extent to which inflationary price increases are compensated for local residents by economic benefits such as increased employment and income is uncertain.

pros of inflation in tourism

cons of inflation in the tour industry

The tourism industry still hasn’t fully recovered from the pandemic. Now it’s also trying to keep up with an influx of visitors,” Knollenberg said.

Not long ago the pandemic almost completely detororiated the tourism industry, few months later the industry faces influx. Despite the ability of the industry to bounce back, some damages done by these factors become too gross to recover from.

inflation cons

The rise in the overall cost of travel due to inflation has reduced the number of tourists coming to the industry reducing the number of sales.

High inflation means increase of price on the services provided and not clients are willing to pay high amounts of money on travel, this may affect the industry in a great way and may even cause some companies under the industry to shut down.

Furthermore, either people are considering to change their travel plans or not, inflation is becoming a major cause of distress among tourists and business travellers.

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