Business Plan Assignment Sample

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Business Plan

Opening a restaurant in Ulaanbaatar, Mongolia

Type of Documents : Assignment

No of Words : 2000

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GLOBALIZATION


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Analysis and critical evaluation of how the current global economic condition

is likely to affect the future growth of the Tourism and/or Hospitality Industry

in Nepal

Hospitality and Tourism is one of the world’s largest growing industries and it is a source

of income for many nations. Being people oriented business, Hospitality industry also gives

several jobs that has helped rejuvenate local economies. Though, like other kinds of

development, hospitality and tourism can also cause difficulties such as loss of cultural heritage,

social dislocation, ecological degradation and economic dependence. In Nepal, the industry of

hospitality and tourism is growing at a skyrocket pace as well as it also has tremendous probable

development of tourism because of its unique cultural and natural heritage. Concerning this, the

tourism policy has been created with a framework of: increasing foreign currency, augmenting

national income and productivity, improving regional imbalances, creating employment

opportunities and projecting the image of Nepal more aggressively in the international arena with

the diversification and development of tourism and travel industries (Hall and Lew, 2009).

Hospitality and Tourism is the main source of foreign exchange incomes. Particularly,

since Mount Everest was first climbed by Tensing Sherpa and Sir Edmund Hillary in the year

1953, therefore the Himalayas of Nepal have attracted the foreigners. Hiking and mountaineering

were of considerable interest as were canoeing, rafting and hang gliding. Tourism was facilitated

with the establishment of airways to Kathmandu as well as other parts of the nation and the

moderation of travel restrictions. In the 1950s, there was scarcity of hotels. Commencement in

the 1960s, the administration encouraged the development of hotels along with other facilities of

tourist by loans. On the basis of government statistics, between the period 1985 and 1988, the

number of rooms in hotel increased from under 22,000 to more than 27,000 (Urry and Larsen,

2011).

Prior to the trade bottleneck with India beginning in the March 1989, tourism had grown

significantly. Due to this, the revenue of hospitality sector has also increased by more than 10%

per year for most of the 1980s. Between the phase of 1985 and 1988, the tourist’s number has

increased from approximately 181,000 to about 266,000. More than 80% of the tourists arrived

in the kingdom by air. In the year 2007, the figure of international tourists visiting Nepal was

526,705 that was an increase of 37.2 percent in comparison to 2006 (Cox, 2005). In 2008, the


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number has decreased by 5% to 500,277. In the same year, 55.9 percent of overseas visitors

came from Asia, in that 18.2% were belonging from India, while Western Europeans accounted

for 27.5%, 3.2% from Australia and Pacific Region, 7.6% were from North America and 2.6%

from Eastern Europe, 0.3% from Africa, 1.5% from Central and South America and 1.4% from

several other nations. Moreover, in the year 2010, total number of 602,855 tourists were visited

Nepal. Due to following reasons, the Nepal government has declared the year 2011 as to be

Nepal Tourism Year as well as hoped to attract one million of overseas visitors to the kingdom

throughout the year. All these factors, contribute to the success and failure of Hospitality sector

of Nepal. The Hospitality industry is seen a manner to alleviate poverty and attain higher social

equity in the nation. The government has also declared 2012, as Lumbini Tourism year, in order

to promote Lumbini – the Lord Buddha’s birth place (Trade Policy Review, 2012).

The country has got many potential benefits of Hospitality development, such as

increased income plus improved living standard, ample of resources for protection of cultural

and natural heritage, new employment opportunities, improved induced income from

expenditures of tourism, bigger community visibility leading to opportunities of other economic

development, increased tax base, development of local handicrafts, improved facilities and

infrastructure. Furthermore, the total income generated by hospitality and tourism in 2011 was

NPR 119.1 billion, which was 8.8% of GDP. The industry has also directly supported in the

creation of 412,500 jobs in a country that contributes 3.3% of total GDP. In addition to benefits,

there are some probable negative impacts of hospitality in Nepal like inflation, low paying jobs,

seasonal employment, pollution, increased costs of food, services, land plus housing, increased

traffic, increased crime, negative impacts on natural or cultural heritage resources, increased

taxes, over-dependence on tourism as prime economic activity and leakage of revenues and

external domination (Promotion of Investment in Tourism Infrastructure, 2001).

In the year 2009, international receipts of hospitality and tourism are estimated to have

reached US $852 billion globally, down from US $942 billion in the preceding year. In actual

terms (adjusted for inflation and exchange rate fluctuations), worldwide tourism receipts

decreased by 6 percent as compared to 4% decline in arrivals, showing the close relation within

both indicators. According to UNWTO (United Nations World Tourism Organization), in crisis

times, revenues tend to be more exaggerated than arrivals, as was in the year 2009. The Middle


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East and Asia-Pacific region led the recovery in international tourist arrivals, through growth

already turning positive in both provinces in the second half of 2009 (Conrady, 2011) . “The

worldwide economic crisis, provoked by the uncertainty around the A (H1N1) pandemic, curved

2009 into one of the toughest year for the tourism sector, “said by UNWTO secretary -general

Taleb Rifai in January 2010”. He also added that “though, the results of latest months

recommended that recovery is in progress, and even somewhat in advance as well as at a higher

pace than previously expected (Tourism and Hotels Industry, n.d).

Hospitality sector does not only produce benefits, but it also brings several negative

impacts that can be overwhelming if not properly manage as well as addressed in time. Growth

in the hospitality sector has significantly influenced many other factors like environmental

damages, loss of cultural integrity and inflation. In a kingdom like Nepal, where the social and

cultural structure is still intact plus traditional, there is sensitivity to have negative impact from

tourism. Equally the deteriorating pristine natural environment and fragile mountain could also

be very sensitive in the direction of tourism as the increasing number of tourists along with their

daily needs demand put pressure on natural resources (Nagle, 1999). Acculturation of intact

culture/tradition as well as westernization could be attributed to the cultural erosion of Nepal

while exhaustion of natural resources particularly wildlife, forest and biodiversity, accretion of

waste along destination community and trekking trails could be pointed to negative atmospheric

influences. Leakage of tourism income plus lack of coordination among local production system

and tourism activities are the example of negative economic crashes. These have been the

discussion topic among policy makers, academia and practitioners on how to lessen it. An

investigation in the Annapurna Conservation Area (Ghorepani) exhibits that from total income,

76.41% of the amount was used to import several goods among lodges while just 23.59 percent

remained in the destination area. Another research reveals that only 6 percent of the total income

was preserved in the local economy in the area of Annapurna Conservation (Thapa, 2010).

World Travel and Tourism Company’s latest research on Economic Impact shows that

Hospitality and Tourism of the world continues to increase inspite of ongoing economic

challenges. In the year 2011, hospitality and tourism’s direct contribution to GDP was US $2

trillion and the industry has created 98 million of jobs in the same period. Taking account of its

direct, induced and indirect impacts, the overall contribution of Hospitality sector in 2011 was


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US $6.3 trillion in GDP, US $743 billion in investment, 255 million jobs and US $1.2 trillion in

exports. This contribution has represented 9 percent of GDP, 1 in 12 jobs, 5 percent of exports

and 5 percent of investment. Moreover, long term prospects with yearly growth have forecasted

to be 4 percent per annum over the ten years to 2022 (The Authority on World Travel &

Tourism, n.d).

The importance and size of the hospitality industry is not just reproduced in the arrival

numbers, but also in terms of financial value. In 2010, the World Tourism Organization forecasts

over one billion arrivals versus just about 693 million today. Worldwide long-distance travel is

likely to grow up faster i.e. 5.4 percent every year than travel within regions 3.8%. The

hospitality and tourism receipts particularly in developing countries comprise a huge part of

foreign trade as well as this sector also provides huge employment opportunities. WTO data

receipts of tourism contain both leisure and business travel and concern only international

travels. The expenditure of domestic tourism is known to be about seven times more than

international tourism spending, but part of total tourism travel expenditure is not known (Current

global tourism trends, n.d). In the context of technology, it serves in making tourism more simple

accessible through reducing prices of products. A very essential technological development was

the jet engine invention. It enhanced the possibilities for the long haul travel, hence answering to

a need elongated not dealt. Developments in communication technology and computer are

significant too, for they enhanced efficiency in processing of data, made information on

possibilities of travel more accessible and lowering the need for administrative personal (World

Tourism Organization, 2011).

Hospitality development and economic development often take place in parallel fashion.

There are five levels of economic development that are associated to some level of hospitality

development. First traditional society, it is characterized by high poverty, poor health and low

per capita output. Many of the underdeveloped globe’s economies are included in this stage.

Apart from domestic visiting relatives and friends, hospitality does not take place (NEPAL

Tourism sector analysis, n.d). Second stage is pre-conditions for takeoff, i.e. prior to the changes

in economy, various change in ideas required to be occur. This change has to be documented by

the leaders of the nation. It is the initial step of development in the economy, leading in modified

social and economic conditions as well as the start of inbound worldwide tourism. In other terms,


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socio-economic alteration allows the region in question to become a destination of tourist. Also,

it is essential that this modification in ideas can be regarded as a development of culture

(Goeldner and Ritchie, 2009). The alteration in ideas given in the preconditions for take-off stage

leads to real economic changes, resulting in the manufacturing and services expansion. Inbound

tourism maintains growing as well as the nation itself starts creating more and more tourists. The

next stage is the drive to maturity which means development of economy results in regular

industrialization and a move from heavy production to more diversified and sophisticated

manufacturing. At attaining the stage of high mass consumption, an economy is completely

grown that is characterized by the manufacturing of huge amounts of consumer services and

goods. The nation is a major creator of domestic and international tourism and hospitality. The

developed world economies are in this stage of maturity (Becken and Hay, 2007).

At last, it can be said that through the conventional tourism the greater part of the benefits

retained in the city and central areas with only a small share reaching the villages. Though, the

local societies could become meaningfully involved in Hospitality, together with disadvantaged

groups and women. With the participatory people-oriented approach, communities could identify

their long term and immediate goals as well as work in the direction of attaining them. The

community based tourism is compatible for the underdeveloped Nepalese economy. Tourists

influences on cultural heritage plus natural resources are to be controlled, particularly in fragile

areas of Nepal. In order to balance the positive advantages of tourism to natural areas, threats

which require to be managed involve deforestation, huge disposal and pressure on biodiversity.

Environmental and tourism planning is the key to balance the requirements of the local

community with the resource protection. All such aspects are essential, as experimental data

published by the Office for National Statistics reflect that the output from UK tourism declined

by 7% over the duration of 2008-09 recessions (NEPAL Tourism sector analysis, n.d).


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REFERNCES

Online References

CURRENT GLOBAL TOURISM TRENDS. n.d. [Online]. Available through: <http://www.gidb.org/cms.aspx?content_id=161>. [Accessed on 9 January 2013].

NEPAL Tourism sector analysis. n.d. [pdf]. Available through: <http://asiantour.progetti.informest.it/market_analysis/nepal.pdf>. [Accessed on 9 January 2013].

Promotion of Investment in Tourism Infrastructure. 2001. [pdf]. Available through: <http://www.unescap.org/ttdw/Publications/TPTS_pubs/pub_2133_tor.pdf>. [Accessed on 9 January 2013].

Thapa, K., 2010. Village Tourism Development & Management in Nepal: A Case Study of Sirubari Village. [Online]. Available through: <http://ecoclub.com/articles/488-sirubari-village-tourism-nepal>. [Accessed on 9 January 2013].

The Authority on World Travel & Tourism. n.d. [Online]. Available through: <http://www.wttc.org/research/economic-impact-research/>. [Accessed on 9 January 2013].

Tourism and Hotels Industry. n.d. [Online]. Available through: <http://www.qfinance.com/sector-profiles/tourism-and-hotels>. [Accessed on 9 January 2013].

Trade Policy Review. 2012. [pdf]. Available through: <http://www.mocs.gov.np/uploads/Press%20Release/TPR%20Nepal_Government%20Report.pd>. [Accessed on 9 January 2013].

Travel & Tourism Economic Impact 2012. n.d. [pdf]. Available through: <http://www.wttc.org/site_media/uploads/downloads/nepal2012.pdf>. [Accessed on 9 January 2013].

Books and Journals

Becken, S. and Hay, E. J., 2007. Tourism and Climate Change: Risks and Opportunities. Multilingual Matters.

Conrady, R., 2011. Trends and Issues in Global Tourism 2011. Springer.

Cox, J., 2005. Around the World in 80 Dates. Simon and Schuster.

Goeldner, R. C. and Ritchie, B. R. J., 2009. Tourism: Principles, Practices, Philosophies. 11 th ed. John Wiley & Sons.


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Hall, M. C. and Lew, A. A., 2009. Understanding and Managing Tourism Impacts: An Integrated Approach. Taylor & Francis.

Nagle, G., 1999. Focus on Geography - Tourism, Leisure and Recreation. 2 nd ed. Nelson Thornes.

Urry, J. and Larsen, J., 2011. The Tourist Gaze 3.0. 3 rd ed. SAGE.

World Tourism Organization. 2011. Cruise Tourism: Current Situation and Trends. Renouf Publishing Company Limited.


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Bibliography

http://www.gidb.org/cms.aspx?content_id=161

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Business Plan Assignment Sample

Small Business & Entrepreneurship

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