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Space Tourism from TUI Travel PLC Group Essay


Introduction

Space tourism is a new concept and is defined as traveling to space by human being for adventure and new experience. Recently, the venture of space tourism has become a very popular venture among the elite people in the society. Despite the fact that this form of tourism is expensive, there is a large and growing market for this form of leisure.

Generally, the tour companies involved in this leisure are very limited and only located in very few areas in the world. In this respect, there is need for our company to venture in space tourism in order to cash in on the returns in this sector.

Due to the nature of space tourism, governments have strict and stringent regulations that govern space travel. It will be essential to evaluate all policies that govern space travel in the entire regions where the company wishes to launch its services. However, the government is keen to promote space tourism, as it will be economically and socially beneficial through creation of new employment in aerospace and other related fields that complement the services offered.

Moreover, proper marketing strategies will be employed to unsure that the venture is successful and profitable. Additionally, the firm must also structure how it will deal with competition from other firms providing the same service or new entries to the market.

This paper will analyze the viability of TUI Travel PLC Group of Companies establishing space tourism division in the range of products they offer. Additionally, it will evaluate marketing strategies to use and its feasibility using the pest analysis. Importantly, the paper explores regulations that the government has put in place to control the venture and alternative policies that can help to develop space tourism. Finally, recommendation based on the analysis will be given.

Background information

Primarily, space travel was done for scientific research, but in the recent times, it has evolved to include leisure space travel. The first space travel was done by a young soviet air force pilot in April 12 1961. From this historic venture, other countries have developed spacecrafts mainly for scientific research (Anderson, Piven, 2005, p.10).

For instance, the success of the soviet created much competition in space technology among countries, leading to advanced spaceships. With development of new and advanced spacecrafts, more professional and affluent people are traveling to space for leisure. Importantly, safety in space travel has considerably improved which is a factor promoting space travel. These improvements in space travel lead to cheaper and easier traveling services of tourists from different destinations in the world.

The first paying space tourist is a California investment manager, Dennis Tito, through Space Adventures, a Russian company. Mr. Tito, sixty years old, spent $20 million for his trip (Anderson, Piven, 2005, p.14). Since the adventure of Mr. Tito, space tourism became popular among the affluent people in the society.

Later in 2002, Mr. Mark Shuttleworth, a South African, became the second space tourist. These two first cases of space tourism created a large impact on the public. However, this form of tourism is still in its infancy stage and major development is needed before it can become a booming industry. Moreover, Russian and the United States of America are the initial countries to set up space tourism industries.

Technological advancement is promoting space tourism with development of cheaper and easier-to-manage vehicles, hence lower costs to the tourists. Moreover, market research indicates that many people are thrilled by the prospects of space tourism and are willing to spend large sums of money.

Initially, traveling to space was done using government owned crafts, however private developers and firms are producing new advance vehicles and providing transportation to the space i.e. virgin Galactic. Since the government has much interest in space innovation, it is a key sponsor for development of advanced models. Besides, other smaller organizations are involved in the funding for development of a reusable launch vehicle. Moreover, new reusable launch vehicles have been developed to ease the cost of space transportation.

TUI Travel PLC Group of Companies comprised several tour companies around the world and its head quarters in UK. Since the needs of tourists are constantly changing, the firm needs to develop a space tourism division in its range of products. The company can attract many clients as it has many established clientele in many countries.

New location and Existing Services

Market surveys conducted in the world have indicated that the demand for space tourism services is highest in North America. Surveys done in North America indicate that up to 60 per cent of people surveyed were interested in space tourism. Therefore, TUI Travel PLC Group of Companies will require establishing division of space tourism in North America to cater for these needs.

To facilitate this venture, collaboration with space transportation provider, Virgin Galactic, will be essential. VG is aggressively developing costs friendly space vehicles that will be able to lower the cost of travel considerably. Moreover, since VG is a big player in space launches, this will ensure constant and superior quality of transportation to our customers.

Other companies are offering similar services in the market. Therefore, the company will have to set up strategies that will help its products to compete effectively with the existing services. The leading company in space tourism is Space Adventure, the company that took the first tourist to space; therefore, it enjoys much popularity in the world (OECD, 2004, p.304). Moreover, the currently offered services are suborbital space travel, as it is relatively cheaper than orbital trips.

Destinations in space tourism

The space is an expansive area that humanity is continuously seeking to explore. However, presently, the most viable and realistic areas in space tourism is the sub-orbital flights and the orbital (OECD, 2004, p.124). The current market players have concentrated on sub orbital destination, therefore, our firm can venture into orbital destinations. Sub orbital flights are flights of 100km that take up only a few minutes to the edges of space.

Moreover orbital flights are flights to the orbit and are longer than sub orbital flights as the customers can reside in the international space station facility (OECD International Futures Programme, 2005, p.304). With this, we can attract tourists who have already explored the sub-orbital but also desire to venture further. The firm may provide travel services to the following areas – parabolic, sub orbital, orbital, and lunar destinations.

The firm can also provide services for earth based activities that are related to space travel i.e. high altitude jetfighter flights (Rycroft, 2002, p.232). These spaces related activities will form an interest for the actual space tourism in the people who participate.

Government space policies in America

Space tourism is controlled by government policies and regulations. Generally, space vehicles used by the firm must conform to all local standards. Like any transportation sector, the government has stringent safety regulations that should be met before any licensing is done.

In addition, space tourism is affected by various treaties, conventions, and policies that are set between inter-governments. Since this is a new field, there are no proper guidelines for space tourism, as earlier policies and treaties were developed on the bases of scientific space exploration and not tourism. Without proper guidelines, uncertainty is created, as it is not clear how the government will regulate the industry in the future.

Due some treaties signed, privately owned space vehicles would need a special permit in order to venture to the space. Through the government, new entrants to the market can be protected in order to avoid unfair competition from the already established players i.e. Space Adventures and Virgin Galactic. On the other hand, the government is levying huge amount of taxes on any outer space venture, which causes the costs to remain exorbitantly high, hence less number of space tourists.

Moreover, due to climate change concerns, the government will require the industry to use eco-friendly crafts that could give an additional cost to the firm.

Generally, the privation of the international Space Station has paved the way for privately owned space crafts to operate without much interaction or influence. The legal front in the United States of America is not very conducive for space tourism compared to its counterpart Russia. However, the company cannot establish space tourism sector in Russia, since it will be affected by fierce competition from the already established space tourism companies.

Alternative Policy

The regulation on the use of the international Space Station must be reviewed in order to give a level competing ground for all commercial companies. The government, through NASA, has a lot of influence on the station, hence limiting the activities of private companies. As a result, the government competes unfairly with the private companies. Nevertheless, since the ISS is owned by several countries, there should be a political will to review the policies on ISS.

Additionally, policies that will promote development of new and advanced space vehicle should be enacted by the government. The freezing of government-funded launches is slowing the development of cheaper means of transportation modes. Moreover, the collaboration of the government and the private sectors can facilitate faster innovation of Reusable Launch Vehicles (RLV).

Space activities

Tourists have deferent needs during their space travel, the most popular being watching the earth. The graph below indicates the preferred activities tourists are interested in (Lindsköld, 1999).

The graph indicates the preferred activities tourists are interested in (Lindsköld, 1999).

Source: Lindsköld, A. Space Tourism and its Effects on Space Commercialization.

For thrill seekers, the tourists can be provided with extreme sports that include skiing, hang gliding and parachuting in space. Therefore, the firm will need to provide all necessary equipment and precautions to avoid and accidents or incidents that could damage the image of the company. This set of activities will attract tourists who love to explore and are risk takers.

The desire to experience weightlessness can be achieved through parabolic aircrafts flights around the space (Rycroft, 2002, p.224). Due to technological advancement, some space related activities could be simulated on the earth, giving people chance to experience the effects of space tourism. These space imitation activities can be starting point for our firm before eventually launching in actual space tourism.

Space tourism Market and Demand prospects

The economy is projected to be growing at a fast rate; hence, there is a high number of middle class people who might be interested in this leisure. Moreover, the fast innovation being experienced in space ship development gives the prospects of developing large commercial space ship, which can lower the costs of space tourism.

Market surveys conducted in the recent past point out that the public is interested in space tourism and it is prepared to pay a relatively substantial amount to do it. Therefore, this large market demand will result in strong and viable space tourism (Pelt, 2005, p.205). The revenue prospects are high and this will depend on the space services offered to various tourists. Moreover, the world’s demand for space tourism is on the increase if the costs are discounted reasonably (Collins, 1994).

Number of people willing to use space service relative to the price associated (Collins, 1994) graph

Source: Collins, P., et al. Commercial Implications of Market Research on Space Tourism. Journal of Space Technology and Science: Special Issue on Space Tourism, part 2, Vol. 10, No. 2, pp 3-11, 1994.

The graph above indicates the number of people willing to use space service relative to the price associated (Collins, 1994).

Alternatively, the firm may provide other services that are related to space tourism to people who cannot afford the actual space travel. These travel events include space camps, visits to space launch sites, and museums (Pelt, 2005, p.205). Additionally, relatively cheaper space travel can be offered through high altitude jetfighter flights or parabolic flights.

These space-related activities can be targeted to potential customers with relatively lower resources. By encouraging and promoting these alternative forms of space travel, the firm will develop the craving for the actual space tourism (Rycroft, 2002, p.232).

The space tourism market is set to evolve from highly priced products to relatively cheaper and accessible products as tourism develops from its infancy stages. Research indicates that up to 80% of people surveyed are attracted to space tourism (Rycroft, 2002, p.232). Most of these people are fairly young and can make a large market base for the company in the future.

With costs of space travel expected to drop considerably to US$ 50 000 with roughly 16 000 passengers interested to fly in 2021, the firm can establish itself in this new market and benefit from associated attractive returns in the long run (Gálvez & Naja-Corbin, 2008, p.3).

Hence, tourism could become the largest activity in space. Indeed, in recent times, the popularity of space travel has risen higher with large companies choosing to advertise or sponsor part of the ventures, while space trips are nowadays used as prizes (Rycroft, 2002, p.233).

Additionally, space tourism is not influenced by culture or other stereotypes that affect other forms of tourism. In this respect, the firm has a broad population that it can influence to participate. Moreover, due to the high costs of space tourism, the firm can make substantial money from only a few customers or a few travels compared to other forms of tourism.

Newer forms of space adventure are being developed, which the company must be strategically placed to take up when they are finally rolled out i.e. high altitude balloon flights (Rycroft, 2002, p.233). This form of adventure can be a launching pad for real space tourism like suborbital flights.

Space transportation needs

The cost of space transportation is very high, with only a few human rated capsules (Rycroft, 2002, p.232). This is one of the greatest challenges that space tourism is facing, and a contributor of the high cost of travel. The developers of space vehicles have to overcome the challenges of lack of funds and technological capacity. Legal constrains also affect the development of advanced space capsules.

Space vehicle for sub orbital transportation can be developed with the available technology but orbital vehicles will involve large costs and risks. Importantly, commercial partners are getting more involved in space launches than the government sponsored launches, hence raising the prospects of an economic friendly space vehicle in the near future. In addition, the firm will require new vehicles that will transport customers to space at a competitive rate compared to other service providers.

The development of Reusable Launch Vehicles (RLV) will facilitate most travels at lower costs, hence more tourists. Moreover, a lot of research is geared to developing a passenger spacecraft that is reusable hence bringing the costs lower. Nevertheless, in partnership with VG, the problem of space transportation will likely be solved completely.

Launch of New Product

In order to attract new customers to this form of leisure, the firm must develop new space activities that will draw people to get involved. One area that has not been exploited in space tourism is orbital accommodation, with most space tourists have expressing the desire to spend a few days in the orbit.

With soaring number of tourists in the orbit, there is need for accommodation. By examining the reasons for space travel i.e. adventure, entertainment or adventure, the firm will be able to provide to its customers the required services. Through this, the firm will develop a strong market brand and increase its profitability. Moreover, different packages for each category of needs will be developed and marketed to the public. To diversify, the firm will have to develop space related activities where it can make more revenue.

Marketing strategies

Space tourism is at its infancy stage, and the companies that will venture early in this form of business venture are set to benefit in the long run when space tourism comes of age. Primarily, proper marketing will be essential in order to reach the clientele and facilitate how the customers can access the services easily.

One of the major concerns with space tourism is its effects on climatic condition, therefore, the firm, in collaboration with space travel companies, must educate the public on how space tourism will promote and not damage the environment. In doing so, the firm will be able to attract potential customers who would have felt that the effects of their travel would result to harming the environment. Moreover, a green marketing strategy would lure customers who are cautious on environmental conditions.

Due to the high cost of space tourism, the firm can encourage potential customers by providing a scheme where they can pay for their tickets with installment over a long duration of time.

This scheme can possibly allow the customers to earn low interest on their money. In this case, the firm will be able to compete for potential customers with companies that only offer pay-as-you-go services. With collaboration with a credit provider, the tour company can enable space tourists to make their trips without the full payments and pay later. Additionally, the company can initiate a lottery program where participants can win a space trip.

The pricing of space tourism and space related activities offered by the company should be competitive to attract customers from other companies offering the same product. The packages should be designed to meet the needs of the customers’ unique expected experiences. For the wealthier customer, a package that allows more comfort i.e. lesser number of people per trip can be sold at a premium rate.

The duration of this package can be a more elongated than standard trips (Peeters, 2001, p.323). Moreover, through advertising and corporate sponsorships, the firm can manage to lower the cost of each passenger.

In developing a marketing plan, the firm will have to identify the target market and its behavior. The marketing costs will be fairly cheaper since the firm can utilize easily available and convenient internet marketing. This can be done through direct e-marketing, advertising, distribution and sales, providing information, customer service and relationship marketing, and conducting marketing research.

To the advantage of the firm, scientific research indicates that space travel has limited health consequence to the tourists, provided safety precautions are observed (Rycroft, 2002, p.234). Moreover, due to the short distance nature of space tourism, short exposures to extreme space conditions have limited health consequences.

Limitation of space tourism

In spite of the prospects of space tourism, the venture also has some major limitations that the company should be aware of. Safety is the greatest concern in space tourism; thus, governments have many policies governing the venture. During one incidence, space shuttle Columbia disintegrated as it returned from space, forcing the Russian government to cancel all space travels in 2003 (Anderson, Piven, 2005, p.15).

Therefore, accidents in space tourism can result to government interference i.e. withdrawing licenses. Moreover, any event of space accidents can draw away potential customers, resulting to incur losses by the firm. In this regard, the risks involved in space tourism must be adequately managed if the venture is to be profitable. Moreover, the government or private companies are not willing to take liability for any eventuality due to the high risks involved, therefore, limiting the number of potential customers (Rycroft, 2002, p.232).

The launch costs are considerably high, with Dr. Koelle arguing that the costs of launching being higher compared to thirty years ago. It is believed that if the costs of space tourism do not go down reasonably and early enough, the number of rich explorers will get depleted, marking the end of space tourism (Pelt, 2005, p.205). For this initiative to be commercialized there is need to develop low-cost, reusable launch vehicles that go to and from space regularly.

The development of efficient launch vehicles such as RLV can lower the associated costs of launching. Moreover, large vehicles that can accommodate a larger number of tourists is another strategy of bringing the costs much lower (Rycroft, 2002, p.233). This advancement of spacecrafts is too expensive, and the government does not want to fund such operation, hence, this cost is passed down to the customers. Therefore, some advancement is not viable in the near future due to lack of enough funding and technological capacity.

The cost of space tourism is not the only limiting factor; the health of the tourists is largely evaluated. Through this elimination based on health, the firm can lose considerable number of prospective customers. Generally, the health and fitness levels required in space travel are very high and sometimes unattainable for people with the resource for space travel.

This limitation is difficult to deal with as the conditions in space permit only certain health standards. Moreover, the industry may have to contend with medical emergency and rescue plans. The most common conditions that affects health of tourists in space are high amounts of radiation, micro gravity and vacuum, however properly designed space vehicle and space suits can help to lower the effects of theses conditions.

The space tourism market is very volatile, as it is influenced by many conditions such as political, economic, and technological factors. Such volatile markets are not appropriate areas to venture ones business into. However, the revenues in this market are large enough to accommodate the high uncertainties in the market. Tour companies have to grapple with the fact that there is lack of adequate accommodation in space hence limiting the number of tourists that can travel simultaneously.

Conclusion

Space traveling began in the world initially for primary reason of scientific study (Peeters, 2001, p.1). Being a new concept of tourism, the experiences and luxurious mature of the space tourism has seen the number of space tourists continue to rise over the years. In the contemporary business world, the demand for space activities is relatively high and growing, hence a good business venture.

Moreover, the public is willing to pay high amounts of money in order to enjoy this experience. Nevertheless, there is a misconception that space tourism is reserved for wealthy and rich people.

There is need for government assistance or funding in advancing the current space vehicles, as well as development of proper legal framework to enable space tourism to flourish (Rycroft, 2002, p.232). Small entrepreneurial companies are working on obtaining private sector financing for the development of fully reusable space transportation vehicles.

Due to the high costs of travel to space, the development of reusable launch vehicles can lower this cost. However, the development of advanced spacecrafts is relatively slow due to unavailability of funds, technological capacity, and government regulations.

The government has strict regulations on space tourism due the safety concerns and other international policies that govern space travel. Primarily, the government has to ensure that the safety of its citizens is maximized, thus imposing strict vetting process before issuing trading license to space tourism ventures.

For instance, health implication can be adverse due to exposure to high amounts of radiation, vacuum, and micro gravity. Moreover, due to the high risks involved, the government and insurance companies always take a back seat and are always resistant to compensate any liability incurred in space tourism. Therefore, it is still not clear how the market of space tourism can be affected in the event of space accidents.

The motivations for space tourism range from education, competition, adventure, and recreation, while space related activities i.e. parabolic flights can be used to create demand for the actual space tourism.

The firm should be aggressive enough to venture into the most popular space activity that involves observation of the earth from the space; however, the firm can also provide services for earth based activities that are related to space travel i.e. high altitude jetfighter flights (Rycroft, 2002, p.232). These space-related activities will form an interest for the actual space tourism from various potential participants.

In order to qualify to travel to space, tourists need to pass stringent health test and qualify in the space training. However, this can adversely slash the number of potential clients.

Some limitation of space tourism is that the market is very volatile, as it is influenced by political, economic, and environmental factors. Moreover, there is concern of how accidents in space could affect the overall space tourism in the future. Additionally, the already existing companies offering the same service will offer stiff competition and to some extent inhibit new entrants to the industry.

Subsequently, the success of this venture is pegged on invention of a cost friendly space vehicle whose development could take a long duration to complete. Finally, there is the fear that if the RLV space vehicles are not developed in the near future, clients who have the resources to tour the space will be depleted (Pelt, 2005, p.205).

Recommendation

The recommendations given below are based on the analysis of the demand for space tourism, technology available, government policies and regulations and the limitations of space tourism.

First, the company should set up space tourism division. In the initial stages, the company should only start offering space related activities such as high altitude jetfighter flights. The company should also include visits to space-related sites on the Earth. In this respect, the company will be positioning itself for the future development of space tourism. Meanwhile, the company should be forging alliances with space transportation companies such as VG for future expansion to the real space tourism.

Additionally, the firm should market the actual space tourist destination to the customers who will participate in the space related activities, while a scheme that facilitates potential customers to start making payment for their trips should be set up. The company can also market space tourism activities to customers obtained from other sectors of tourism. Moreover, by motivating normal and existing tourists to venture into new form of tourism, the firm will obtain market for space related activities.

References

Anderson, E. & Piven, J. (2005) The Space Tourist’s handbook: where to go, what to see, and how to prepare for the ride of your life. Philadelphia: Quirk Books.

Collins, P., et al. (1994). . Journal of Space Technology and Science: Special Issue on Space Tourism, part 2, Vol. 10, No. 2, pp 3-11. Web.

Gálvez, A. & Naja-Corbin, G. (2008). . Web.

Lindsköld, A. (1999). . Web.

OECD. (2004). Space 2030: Exploring the Future of Space Applications. Paris: OECD Publishing.

OECD International Futures Programme. (2005). Space 2030: Tackling Society’s Future Challenges. Paris: OECD Publishing.

Peeters, W. A. R. (2001). Space Marketing: A European Perspective. New York: Springer.

Pelt, M. V. (2005). Space Tourism: Adventure’s in Earth’s Orbit and Beyond. NY: Praxis Publishing Ltd.

Rycroft, M. J. (2002). Beyond the International Space Station: the future of human spaceflight: proceedings of an international symposium, 4-7 June 2002, Strasbourg, France. MA: Springer.

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