1. Malta is located in the Mediterranean Sea and has a population of about 419,000 (Cavusgil, Knight & Riesenberger 2012). It is highly dependent on tourism, because it accounts for about 30% of its GDP. Apart from earning on foreign exchange, the tourism industry also provides employment to about 8.5% of the workforce (Czinkota, Ronkainen & Kotabe 2011). About 4, 500 businesses in the county provide services in the tourism sector. The leading origin markets for the country include the United Kingdom, Spain, France, Italy and Germany. The main product that the country is famous for is beach tourism, as it has several attractive sandy beaches. The emerging global trends the globe Maltese tourism and influence the products and services it offers to its clients. This paper will explore the emerging trends in the tourism and travel sector and their effect on Malta. Additionally, it will evaluate how EasyJet and Malta have responded to the trends.
One of the characteristics of the tourism and travel sectors is that they are sensitive to changes in other unrelated areas (Czinkota, Ronkainen & Kotabe 2011). For instance, the lack of peace and stability in the region or a country can negatively affect the performance of the sector. Therefore, various emerging trends in the world have influenced the sector, either negatively or positively.
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The first trend is seasonality of the tourism sector. Tourism is highly seasonal, which means that businesses that rely on it are likely to record low performance during the winter season. The seasonality of the sector has a ripple effect in other areas such as human resource development. In Malta, tourism sector employs both highly-qualified and low skilled workers. The highest number of employees has few skills. The lack of adequately trained personnel is attributable to the seasonality of the industry. The reason many institutions are unwilling to commit to personnel training is the fact that they are only required over a short period during the high season. Once the season is over, most of the workers are laid off. Consequently, organizations are not motivated to train workers, because they cannot optimize them due to the seasonality factor. The preference of various organizations given to the low-skilled personnel is based on manageable compensation and temporary basis. The effect of this seasonality on the products and services is compromised quality, because the personnel lacks required knowledge.
2. Thus, Malta has created various strategies to mitigate the effects of seasonality. First, the country has started to diversify its products and services so that it can attract a wide variety of clients from other destinations apart from Europe. Malta has created various product packages related to sports and cultural activities. Cultural activities are packaged in such a way that tourists visit rural villages to enjoy the folklore, heritage sites, museums and archaeological sites. Situating cultural events in rural settings is vital, because most of the Europeans live in overcrowded urban centers. They may wish to escape such life by visiting rural settings to enjoy the peace and serenity. Apart from cultural tourism, the country has managed to develop its blue tourism by enhancing the capabilities of its ports. Among the products that Malta has developed under the blue tourism are sailing, yachting, cruising and cruise entertainment. Malta has put up mechanisms to enable local tourism by making the products and services affordable for the marginalized and those with disabilities. These alternative products, services and strategies reduce the severity of seasonality.
The second trend that has affected tourism and travel sectors is the economic crisis of the European region. This latest economic crisis affected the entire world and had consequences on the Maltese tourism and travel sectors. When the economic conditions of the source markets are unfavorable, spending tendencies reduce because of uncertainty created by the economic downturn (De Kluyver & Pearce 2012). As a result, fewer people are willing to engage in holiday and leisure travels. Malta has been affected by this trend, because most of its source markets are within the European region. Those who decide to travel despite the economic problems expect the destinations and travel companies to offer cheap packages that reflect the reality of the economy. The overall effect on the industry has caused fewer earnings as a result of the small number of tourists and the amounts paid by those willing to travel. The products and services offered must consider these problems, which may lead to the creation of alternative packages that suit the needs of the clients. Hotels and other accommodation companies are also affected by the economic crisis, because their occupancy rate is low. Low occupancy rate is detrimental to the hotels because of the perishability of the hospitality products. When the rooms have not been occupied in a single day, the revenues that would have been collected cannot be recovered. Moreover, various attractions at the destinations may experience shortages of visitors. Most of the clients who visit Malta go there because of the beautiful beaches. However, when the economic conditions are favorable, other attractions may get some visitors, because the spending tendency is high. However, poor economic conditions may restrict tourists to use their main products and services only, as they are unwilling to spend extra money.
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The third trend is the technological change. The improvement of technology has made service delivery efficient in the whole world (MacLennan 2011). Almost all travel companies and hotels use technological gadgets and systems in their operations to provide quality products and services. Booking systems have been automated and security checks have increased. These checks are vital, especially in the wake of increased terrorism. Customers feel safe in the destinations that can assure security. Many hotels have CCTV cameras that monitor people and their activities to ensure the safety of the guests. The same checks are conducted at the country’s airports, because international carriers cannot travel without security procedures. Customers can perform their bookings through the internet, which eliminates the need to visit travel agencies. Therefore, international trends of airport security procedures have forced Malta to adopt them as well. These technological changes have affected Malta, because the customers visiting the country expect high-quality offerings. Hotels have installed computerized checking systems and have started to utilize the internet to market their products and services. Additionally, customer service has improved, because queries can be solved in real time leading to customer satisfaction. Malta has been able to create other products and services as a result of the improved technology. Scuba diving and sporting facilities whose construction depends on sophisticated technologies have been created in the country.
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3. EasyJet is the largest British airliner in terms of passenger numbers that operates both in international and domestic destinations (EasyJet 2014). Its operations in Malta started in 2008 and experienced tremendous progress based on the number of clients. EasyJet has been affected by the emerging trends in the tourism and travel sectors, because it depends on tourism to a large extent. When corporations are faced with a challenge, they create effective mechanisms to overcome it and gain competitive advantage. EasyJet has adopted several measures to mitigate the negative effects of current trends and capitalize on the advantages.
EasyJet has responded to the economic crisis by offering affordable products and services to the price-sensitive customers. Thus, the carrier differentiates itself by offering low-priced packages. When an organization reaches economies of scale, it can lower its prices without incurring losses (Frynas & Mellahi 2011). The magnitude of EasyJet’s operations provides it with decent economies of scale. As a result, it can provide products at lower prices as compared to its competitors. Competitors without the economies of scale cannot enter the market segment, because EasyJet’s low prices act as entry barriers. The company implements its low-price strategy by offering discounts to the clients and allowing them to book flights and accommodation together at no extra cost. Additionally, the company has increased the number of destinations in the country to ensure that any increase in the number of tourists due to the new packages is taken care of and efficiency is maintained.
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During the low season in the tourism industry, airlines record losses because of the reduced number of travelers. As a result, they must create products that will reduce seasonality. In addition to the packages created by the presence of Malta, the airline is targeting business travelers who do not follow the travelling season. Likewise, EasyJet started targeting business travelers to all of its destinations. The combined approach by Malta and EasyJet has helped the airline to reduce its low season losses significantly. In 2014, the company reduced its half-year losses as a result of increased business volume in the business category. The growth of the business segment recorded 8.5% in 2014, which was higher than the 4% overall growth (Hooley, Saunders & Nicoulaud 2008). One of the attractive features that helped the company attract business clients was the concept of allocated seating. Customers during the business trips are allocated seats prior to the flight and are aware of their sitting arrangement before the journey starts. Additionally, for a small additional fee, customers can choose the seat they want. Such customer-centric approach has endeared the organization to clients travelling for business trips. Its large number of planes along major routes has increased the confidence of the business travelers because of exemplary efficiency. When a client requires a to-and-fro flight within the same day, he can get it arranged. Consequently, customers have become loyal to EasyJet, which has reduced the negative effects of seasonality.
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Easy Jet has responded to the technological trend by ensuring that most of its products and services are automated. The booking system on its website is fully electronic, which reduces the need for the customers to go to its offices for booking (EasyJet 2014). Free online booking has helped the company to cater for the price-sensitive customers. Moreover, customers can get customized products and services at reduced prices by just providing information about what they seek through the company’s website. Once the company receives the information, it creates a package that meets the cost and other client requirements. The organization has also created a system where the clients can check in through their electronic gadgets eliminating the need to queue for checking in prior to travelling. Easy Jet’s system allows customers to cancel room bookings in most hotels at no extra fee, which increases customer flexibility and convenience in cases of last minute changes in their itineraries.
4. All responses can be justified as long as they lead to customer attraction and retention. Offering low-priced products and services is essential, because the largest target market for the organization is the economic segment. Since it is characterized by price-sensitivity, providing affordable products is one way to ensuring their loyalty and satisfaction (Pacheco-Ornelas, Cuevas-Rodríguez & Rodríguez-Pacheco 2012). Focusing on the business segment is an ideal strategy, because it puts EasyJet at the top of its competition. Since the trend in the industry reflects low business volume during the low tourism season, this way to reducing losses is innovative and can increase the company’s profitability.
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Moreover, differentiation is one of the generic strategies that corporations use to gain a competitive edge (Hopkin 2014). While other carriers are struggling with huge losses when business performance is minimal, EasyJet is able to cut down losses. The technological trend response is adequate, because, apart from the functional needs the company serves, it must provide convenience and quality to the clients (Schermerhorn 2010). Through its online system, seamless services reduce discomfort the customers have to encounter before travelling by making booking and checking in. Consequently, clients appreciate the effort of the carrier by becoming loyal. Therefore, all the responses are justifiable, because they contribute to increased profitability, customer retention and loss reduction.
The responses were very effective, as reflected by continued improvement in EasyJet’s performance. The combination of low prices and focus on the business segment have led to tremendous improvement in the carrier’s performance. For instance, passenger numbers reached 64.8 million in 2014, which represented an increase of 6.6% from 2013 (EasyJet 2014). The number of clients increased, because they were happy with both the assortment of products and services and their affordability. The number of seats flown in 2014 was 71.5 million, which meant a 5.1% increase from the previous year (EasyJet 2014). The losses associated with seasonality reduced significantly. This is an indication that the diversification in the business segment is realizing its objectives.
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As a result of increased profitability and reduced losses in the low season, the value of the ordinary dividends increased by 35.5% in 2014 from the previous year’s value (EasyJet 2014). Since one of the objectives of the company is to provide value to the shareholders, this increase is a sign of strategy’s effectiveness. Some of the contributors to the increased number to seats flown were additional business clients. The efficiency with which EasyJet operates in terms of adherence to departure times is essential for business travelers. Business people are time-conscious and need to reach their destinations on time. Therefore, they are likely to use companies that can assure punctuality (Kurtz & Boone 2010). The choice of seats by the business passengers offers convenience, because they can carry out businesses online uninterrupted, which improves the value they derive from EasyJet’s services. The company operates in primary airports and has created a rapport with the management of the airports. Consequently, the commissions charged by EasyJet are reduced significantly by long-term deals. When the company saves costs, it transfers the advantage to the clients by lowering prices. The effectiveness of low cost flights is felt by companies that focus on the economy class as the primary target market.
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Globalization and increased competition have provided customers with more power than before (Lane et al. 2009). The availability of a wide range of products and services gives clients choices and allows them to demand what they want from corporations. Additionally, competition creates innovations, which sets high standards for products and services. When customer preferences and needs change, companies must evaluate them and respond accordingly to remain competitive.
Failure to respond to customer needs has several consequences for firms. First, when a company fails to match its products and services with customer demands, it has no market for such products (Paulino 2009). Customers shun products that do not satisfy their needs and seek those that are responsive to their changing requirements. In the modern business world, customers respect companies that mind their feelings. Customization of products has become vital, because it creates a personal relationship between a corporation and its consumer (Pearce & Robinson 2009). A corporation that is not responsive to the customers loses its current clients and cannot establish new ones. Secondly, firms that do care about their buyers cannot enjoy the benefits of customer loyalty. This devotion on the side of the customer provides companies with a competitive advantage, because they stick with the company despite the competition. Consequently, such businesses enjoy profits because of a stable customer base. The failure to meet the changing customer needs leads to the loss of market share, because competitors that can satisfy their changing needs attract them. In some cases, the failure to respond to clients’ needs can lead to total business failure. Customers pay for products that provide value for their money. In instances where customers are not provided with the value they require, they can switch to substitutes. Even when a company decides to comply with the needs later, bad reputation created initially may discourage customers from switching back. Consequently, a corporation may go out of business as a result of failing to be at par with the altering needs (Lutchman, 2011).
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In conclusion, emerging trends that influence the tourism and travel industry include seasonality, economic crisis and technological change. They have affected the products offered in Malta by leading automation, diversification and reduced prices for local tourists. EasyJet has responded by offering cheap flights, diversifying its offerings and automating its products and services. These responses are justified, because they have led to customer attraction and retention. Additionally, they are effective, because they have increased the number of passengers, seats flown and have improved the dividends’ value. The consequences of the company’s failure to respond to changing customer needs include the loss of current markets and market share, customer loyalty and possible business collapse.