e economic environment affects tourism organizations in two ways, the first one generates changes in the demand for an organization’s products and the second way implies changes that may affect an organization’s costs. The key macroeconomic factors affecting demand for travel and tourism products are customer’s expenditure, export demand, investment demand and government expenditure (Holloway, C & Taylor, N, 2006).
The main determinants of customer’s expenditure are real disposable income, interest rates, expectations, and savings ratio. The economic environment will affect export demand in two ways – Exchange rate will affect the overseas price of exports and level of economic growth in countries, which are markets for the products. The determinants of investment demand are customers’ expenditure, expectations, amount of spare capacity and interest rates. The level of government expenditure reflects the state of the economy and political party in power. The key macroeconomic factors affecting costs of leisure and tourism products are interest rate, inflation, exchange rate, and indirect taxes.
Find out more from UK Essays here: http://www.ukessays.com/essays/tourism/the-impact-of-air-transport-on-tourism-tourism-essay.php#ixzz3RL0qUBoI