PESTLE Analysis refers to assessment of external environment that include political, economic, social and social, technological, legal and environmental factors.
The political environment of UK is stable, however the issues such as war against terror and European Union enlargements affects political stability. The taxation policies of Government, Value Added Tax on air tickets and decisions regarding rising fuel cost have direct impact on the company’s operations (Nand, 2012). Besides this, the decision regarding single European Currency is still unresolved that affects the business of Thomas Cook Group in European region.
Economic factors have great impact on the travel and tourism business as it influences costs, demand, profits and prices. The holiday packages offered by Thomas Cook Group are income elastic; therefore the demand changes according to the change in income. The current inflation rate is low which has increased the purchasing power of customers (World Travel and Tourism Council, 2013). This inflation rate must be maintained or lowered as it will benefit the travel and tourism industry in general and Thomas Cook Group in particular. The low unemployment rate has increased job security which encourages consumers to spend on travel and tourism. In addition, the stable currency of British Pound and Euro against other foreign currencies provides Thomas Cook Group with an opportunity to serve diverse customers who are visiting European region. These positive economic factors predict positive growth of the travel and tourism sector.
Social and cultural Factors
The European consumers are socially active and love to visit different places with family and friends. They are much inclined to visit home country destinations that provide Thomas Cook Group with an opportunity to operate successfully and expand its business (Budeanu, 2007). In addition, the large number of foreign visitors visiting European region has also increased in recent years that has benefitted the company. The middle class group across the world and particularly in European region is growing at a fast pace that shows that more people will be using travel and tourism services in upcoming years.
The advancement in technology has direct impact on the business globally. This has emphasized the companies that are operating in travel and tourism to adapt to latest technology i.e., allows customers to do online booking for holidays and tickets (Thomas Cook Group Plc, 2013). In addition, to remain competitive, Thomas Cook Group needs to provide innovative services to its customers. Failure to provide customers with latest technology in all respect i.e., at hotels, resorts, during travel, transportation, etc will result in customer dissatisfaction, therefore all necessary facilities must be provided (Thomas Cook Group Plc, 2012).
Change in legal factors of any country affects the business operation. Therefore, any change in travel laws and regulations such as Regulations of 1992 Package Travel, Regulations of Air Traffic Organisers Licence and Civil Aviation Authorities will have direct and indirect impact on the operations of Thomas Cook Group (UK Travel Laws and Regulations, n.d.). Besides this, other legal factors such as change in visa policy, restriction on visa to foreign country consumers will negatively affect the profits of the company.
The environmental factor considers weather and other assessment of environmental offsets. The weather of most European countries is good temperate and does not go to extreme level of summers/ winters that provides benefit to travel and tourism sector (Weaver, 2010). However, one major concern for the industry and particularly for Thomas Cook Group is increased concept of green travel that has created pressure to reduce carbon emissions and pollutions as it contributes to global warming issues (Pedro, 2013).
Budeanu, A. (2007). Sustainable tourist behaviour – a discussion of opportunities for change. International Journal of Consumer Studies, 31, 499–508. Retrieved from ftp://ftp.puce.edu.ec/Facultades/CienciasHumanas/Ecoturismo/ArticulosTurismo/Art%C3%ADculos%20cient%C3%ADficos/Turismo%20sostenible/comportamiento_turistas_sostenibilidad.pdf
Nand, L. F. (2012). 5 key issues facing travel and tourism. Retrieved from http://www.hotelnewsnow.com/Article/9312/5-key-issues-facing-travel-and-tourism
Pedro, L. (2013). Sustainable, responsible tourism: Luxury travel's new trend. Retrieved from http://www.telegraph.co.uk/luxury/travel/1983/sustainable-responsible-tourism-luxury-travels-new-trend.html
UK Travel Laws and Regulations. (n.d.). Retrieved from http://www.protectedtravelservices.com/company/uk-travel-laws-and-regulations
Thomas Cook Group Plc. (2012). Discoverour journey towards a sustainable future. Retrieved from http://www.thomascookgroup.com/wp-content/uploads/2013/05/Thomas-Cook-Group-Sustainability-Report-2012.pdf
Thomas Cook Group Plc. (2013). Transforming Thomas Cook. Retrieved from http://www.thomascookgroup.com/wp-content/uploads/2013/03/Transforming%20Thomas%20Cook%20v14%20final%20-%20screen%20version%20-%20fonts%20embedded%5B4%5D.pdf
Weaver, M. (2010). Warm weather to boost UK tourism. Retrieved from http://www.theguardian.com/uk/2010/may/21/warm-weather-boost-uk-tourism
World Travel and Tourism Council. (2013). Travel & Tourism Trends and Economic Impact. Retrieved from http://www.wttc.org/site_media/uploads/downloads/WTTC_monthly_update_September_2013.pdf