MACROECONOMIC

ENVIRONMENT OF TOURISM
ENTERPRISES

Name: Francisco José Fernández Martínez (Erasmus Student)

Professor: Jacek Drążkiewicz
Course: Economics of Tourism Enterprices
The tourism enterprise can be found as an open system in constant
interaction with a setting. The results of the companies depend on a set of
external factors that give rise to opportunities.

The environment is divided into Macroenvironment or Generic Environment

and Microenvironment or Specific Environment. The Macroenvironment is
composed of a set of elements that affect all companies equally at a given
time and geographical location, such as economic, political, socio-cultural and
technological factors of a country.

For this reason I have chosen a Spanish hotel chain called: Paradores de
Turismo, to carry out the PESTLE analysis. Before doing so, I will explain in
detail how the company works.

Paradores de Turismo is a Spanish public hotel chain that manages 98 hotels

throughout Spain and, since October 2015, a franchise in Portugal. The
establishments are located in emblematic buildings or outstanding locations
that have been selected for their historical, artistic or cultural interest. 30 of its
hotels are classified as Assets of Cultural Interest and another 15 are located
in historical sites declared Assets of Cultural Interest.

Paradores, which have a valuable historical and artistic heritage, have as their
mission the conservation of the buildings they operate, as well as the
promotion of sustainable and quality tourism. Its artistic collection is made up
of around 9000 works.

PESTLE analysis is a very useful tool for understanding the growth or decline
of a market, and consequently the position, potential and direction of a
business.

PESTLE analysis focuses on analysis:

 Political and Legal Factors

 Economic Factors
 Social-Cultural Factors
 Technological Factors
 Ecological Factors

POLITICAL AND LEGAL FACTORS

For the creation of tourist destinations, it is necessary the existence of some

specific organism that studies the opportunities that a country has from its
current and potential resources. In the case of Spain, jurisdiction over tourism
matters was transferred to the Ministry of Industry, Tourism and Commerce by

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Royal Decree 542/2009. This ministry has other bodies that depend on it, the
General Secretariat of Tourism, the Tourism Agency, and the General
Directorate of Tourism.

The functions of these bodies are mainly: to define, develop, coordinate, and
execute tourism policies and international tourism cooperation. The
competences in tourism matters are distributed in the following way:

-National level: promotion

-Regional scope: development and promotion in the national market.

-Local scope: reception and information.

Spain, being a member country of the European Union, receives funds for the
improvement of the tourist quality and the creation of new products. However,
the European Union does not regulate specific aspects of the sector, only
those related to the protection of consumer rights.

This fact does not directly affect Paradors, as it is beneficial for the tourism
sector in general and can have a positive effect on the environment of a
Parador, facilitating the revitalization of areas with fewer resources. However,
political instability and changes in government can lead to changes in tourism
policy that may eventually affect the company or its status as a 100% public
company.

ECONOMIC FACTORS

The study of the evolution and situation of different macroeconomic variables

is not dispensable since they have a direct influence on the sector. Firstly, it is
important to know how the GDP has evolved in Spain over the last few years,
since a large part of the demand for Paradores is national. As can be seen in
the following graph, the GDP has been on an upward trend since 2012, when
it reached a negative rate of 2.9%; however, since 2014 the rate has been
positive, standing at 3.2% in 2016.

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It is also important to know the employment situation, Spain has a high or
even a low rate of unemployment. According to the latest INE publications,
the unemployment rate at the end of 2016 stood at 18.63% and the activity
rate at 58.95%. (INE, 2017). The Consumer Price Index (CPI), which indicates
a country's level of inflation, the latest data from the INE puts it at 2.97% in
Spain with an upward trend over recent years. This price increase affects
tourism in two ways: on the one hand, hotel, restaurant, and bar expenses
increase and on the other hand consumers reduce their intention to travel with
the price increase.

SOCIAL AND CULTURAL FACTORS

People's tastes and preferences for travel are changing today. There is mass
tourism in many destinations, and this causes changes when choosing a trip.
As mentioned above, many tourists are looking for different destinations from
the usual ones, the planning of them is different, they are looking for more
quality, unique experiences.

Demographics also play an important role, the constant increase in population

causes more potential customers for the tourism sector, as well as new tourist
profiles. In addition, the population pyramid tends to age, therefore, senior
tourism will increase so it is necessary to have the necessary resources to
receive this type of clientele (accessibility, low season, health insurance, etc.).

Likewise, the UNWTO foresees an enormous growth in migratory movements,

this fact causes an increase in cultural diversity and travel to family and
friends. However, it should be borne in mind that tourist destinations that have
an excess of demand provoke rejection in the local population, as may be the
case with Venice.

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The UNWTO also recommends to tourism companies products reinforced
with 24-hour services for those travelling alone. This can be a plus as this
type of traveler is increasing. (Canalis, 2011). It is also important to consider a
key factor that directly affects tourism: terrorism.

Threats of terrorist attacks mean changes in travel preferences. When

choosing a trip, tourists must perceive it as safe. Although it is unpredictable,
it is important to have a security infrastructure and to have personnel who
know the protocols for action in case of terrorist attacks. In the not-too-distant
future, many hotels will have anti-terrorist security certificates, as is already
being observed in some establishments.

TECHNOLOGICAL FACTORS

Today, the Internet is an essential tool for almost all sectors. In the case of
the tourism sector, new technologies change the way of approaching
customers when offering a product. The use of Big Data (management and
analysis of large amounts of data) allows tourism companies to carry out an
intelligent management.

Through the analysis and monitoring of customers to offer them a product

completely associated with their needs. The deep knowledge of the clients
allows to create a product with a superior value. Another example is mobile
applications, from which customers can obtain relevant information, make
reservations, receive information and so on.

The Big Data will "gradually and radically change tourism businesses and the
ways in which companies relate to their customers," according to Javier
Blanco, founder of Tourism & Innovation and advisor to the UNWTO. In
addition, robotization is a factor that must be considered since it is on the way
to becoming an essential element in the world of tourism supply. For example,
in Japan, there are already some hotels that are completely robotized.

ECOLOGICAL FACTORS
Today, it is impossible to conceive of a company in the tourism sector that is
not involved with the care of the environment. The importance of sustainable
tourism has led to the creation of a project called Local Agenda 21.

This project was agreed upon at the United Nations Conference on

Environment and Sustainable Development in 1992 in Rio de Janeiro. The
project establishes that for each territory that applies it, there should be direct
involvement of the governors, town halls and other local administrations.

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The application consists of a strategic plan with environmental policies to
combine tourism and economic development while protecting the
environment. The General Assembly of the United Nations has declared 2017
as the international year of sustainable tourism.

It should be noted that sustainable tourism does not only affect ecotourism,
but that sustainability is a transversal phenomenon that affects all segments
of tourism (Canalis, 2011). The high energy consumption, as well as the
generation of waste by hotel companies is an aspect that can affect the
opinion of the local population.

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