MPE 781/981- Economics for Managers Trimester 2, 2015

MPE 781/981- Economics for Managers Trimester 2, 2015 Assignment: Economics Case Study Due: 7th September (Monday, 11:59 pm), 2015. I. Assignment Overview: This assignment is based on an article “Tourism Investment Monitor,” by Tourism Research Australia, May 2015. The article is already attached to this assignment question. Please read the article carefully before attempting this exercise. You will also need to draw on other resources available through the library as well as external resources. Please note that you need to provide clear references for your sources when citing research and data. II. Learning Objectives: This assignment is d e s i g n e d to encourage you to think about the application of concepts learned in this unit in a real world scenario. This assignment, indeed, is interesting as it explains how the existing economic theories can explain markets like tourism in particular, how Government policies can shape up the tourism industry of a country. We hope that this assignment will expand the horizon of your thoughts. III. Assessment: Your score on this assignment contributes towards 40% of your final score for this unit. Based on the attached Rubric, your assignment will be graded on your use of appropriate economic theory and concepts, clarity of exposition and overall quality of your answers. Although you can work in group, this is not a group assignment and you must submit answers individually. IV. Submission: This assignment must be submitted electronically on CloudDeakin (CD) Dropbox area by all students by 11:59pm on the due date. No hard copy is required. Print your name and student ID clearly on the first page of your answers. Please check the Academic Honesty and Misconduct section in the Unit Guide. Submitting your answers automatically implies that you have read and accepted the Plagiarism and Collusion Declaration, and that the submitted answers are entirely your own work. V. Questions: Answer all questions. Limit the total word count of your assignment to less than 3,000 words. You are encouraged to 1provide necessary graphs, figures and tables with data wherever possible, which are not subject to word limit. Please be careful in implementing referencing styles. Question 1: (8 marks) In your own words, summarize the article, “Tourism Investment Monitor,” by Tourism Research Australia, May 2015. In particular, what are the main messages of the article? [Hint: Please link your summary with relevant economic theories wherever you can] Question 2: (8 marks) Use appropriate diagrams to answer: Do you think increasing investment in Australian tourism industry is a prudent economic policy for the future sustainability? Why or why not? [Hint: Please do an extensive literature review to find out the pros and cons of the global tourism industry, their short term and long term impacts, etc.] Question 3: (8 marks) Suppose that the Australia’s hospitality industry is perfectly competitive (i.e., many hotel and/or accommodation providers). The federal government decides to levy a buyer’s tax (specific tax) on hotel accommodations. Use appropriate diagrams to answer: (a) Examine the impacts of this buyer’s tax on the equilibrium rental prices, consumer surplus, producer surplus, and total surplus (or social welfare). (b) Can an increase in the buyer’s tax raise social welfare? (c) Can an increase in the buyer’s tax raise the federal government’s revenue? Question 4: (8 marks) Suppose that the tourism department’s prediction of increased tourism activities and investment has been proved right. Use appropriate diagrams to answer [Hint: Let’s assume the labor market in tourism industry is perfectly competitive]: (a) What should be the new wage level in the tourism industry? (b) If due to huge union pressure, the government sets minimum wage above this equilibrium wage, what should be the consequence? What would happen to social welfare? Question 5: (8 marks) Find three other countries or economies who are among the leaders in global tourism market. Give a brief description about their tourism industries [Hint: If possible present concrete fact and figures]. Provide your views or suggestions on the best measure to promote Australian as a highly sought tourism destination based on your research on the above three tourism based successful economies. 2 TOURISM INVESTMENT MONITOR 2015 May 2015 TOURISM INVESTMENT MONITOR 2015 Tourism Investment Monitor 2015 Photo: Supplied. TOURISM RESEARCH AUSTRALIA CONTENTS FOREWORD 1 INFOGRAPHIC - AUSTRALIAN TOURISM INVESTMENT PIPELINE 2014 2 THE TOURISM INVESTMENT ENVIRONMENT 3 KEY TOURISM INDUSTRIES – INVESTMENT AND SUPPLY 8 OPPORTUNITIES 16 CONCLUSION 19 FIGURES TOURISM RESEARCH AUSTRALIA FOREWORD Tourism Investment Monitor 2015 Monitor THE 2014 PIPELINE 168 projects $53.7 billion ??$31.3 billion ??$13.9 billion ?? $8.5 billion MonitorMonitor 5 15? $3.9b $1.3b ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? 3 AUSTRALIAN TOURISM INVESTMENT PIPELINE 2014 $53.7b 168 TOTAL VALUE OF PIPELINE $4.3b 29 PROJECTS NEW 71 5 168 71 21 CONTINUING Value: $10.9b $6.9b 23 PROJECTS STILL IN PLANNING/ UNDER CONSIDERATION 32 Value: $12.2b $3.9b 5 PROJECTS PROGRESS FROM PLANNING TO COMMITTED 14 Value: $1.2b $1.5b 9 PROJECTS REMAIN COMMITTED/ UNDER CONSTRUCTION 35 Value: $28.1b $5.2b 7 PROJECTS 21 ACCOMMODATION PROJECTS Value: $1.5b $421 MILLION 4 PROJECTS $31.3b 13 PROJECTS & 182 FLEET ORDERS+ $10.9b $ $20.4b AVIATION PROJECTS Value: $640 MILLION $13.9b 57 PROJECTS 15,915 ROOMS ARTS, RECREATION & BUSINESS 7 PROJECTS $8.5b 88 PROJECTS SERVICES Value: $936 MILLION TRA.GOV.AU TOURISM RESEARCH AUSTRALIA THE TOURISM INVESTMENT ENVIRONMENT RECENT ECONOMIC TRENDS INDUSTRY AND INVESTOR SENTIMENT Tourism Industry Sentiment Survey Capacity to make major investments Capacity to refurbish existing product Exchange rate depreciation Shortage of skilled labour Adequacy of airport transport links Quality and frequency of major events, Lack of attractions Inadequate room supply Tourism Investment Sentiment Survey Very optimistic Optimistic Neutral OptimisticGlobal financial environment Access to investment funding FIGURE 1 IMPORTANCE OF FACTORS IN UNDERPINNING POTENTIAL TOURISM INVESTMENT IN THE NEXT 12 MONTHS 5 MOST IMPORTANT 2014 2013 2012 4 3 2 1 0 GLOBAL FINANCIAL ENVIRONMENT ACCESS TO INVESTMENT FUNDING EXCHANGE RATES IMPROVED CONSUMER CONFIDENCE AND DISCRETIONARY SPENDING DEMAND FOR INTERNATIONAL SEAT CAPACITY (AVIATION) DEMAND FOR DOMESTIC SEAT CAPACITY (AVIATION) Tourism Investment Sentiment Survey Tourism Investment Sentiment Survey 2015 TOURISM RESEARCH AUSTRALIA WHAT DOES THE FUTURE HOLD FOR AUSTRALIA’S TOURISM INDUSTRY? TOURISM INDUSTRY PERFORMANCE ECONOMIC CONTRIBUTION INTERNATIONAL VISITOR ARRIVALS AND EXPENDITURE ?? ?? ?? ?? ?? ?? ?? DOMESTIC OVERNIGHT TRIPS AND EXPENDITURE ?? ?? ?? ?? AVIATION TOURISM RESEARCH AUSTRALIA ACCOMMODATION ? ? ? ? KEY TOURISM INDUSTRIES – INVESTMENT AND SUPPLY TOTAL INVESTMENT PIPELINE $4.3b (8.7%) AVIATION $1.8b ARTS, RECREATION & BUSINESS $5.0b ACCOMMODATION $1.1b Under consideration/possibleCommitted/under constructionRecently completed Tourism Investment Monitor Monitor Committed/under construction Under consideration/ possible FIGURE 2: TOURISM INVESTMENT PIPELINE PROGRESS, 2011–2014 2014 2013 2011 UNDER CONSIDERATION/POSSIBLE COMMITTED/UNDER CONSTRUCTION RECENTLY COMPLETED* 0 10 20 30 40 50 60 $ BILLION TOURISM RESEARCH AUSTRALIA ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? FIGURE 3: TOURISM INVESTMENT PIPELINE – VALUE OF INVESTMENT BY SECTOR AND STATE/ TERRITORY, 2014 $245 MILLION 0.7% $7.8 BILLION 23% $6.6 BILLION 20% TOURISM INVESTMENT PIPELINE $53.7 BILLION* $9.1 BILLION 27% $2.4 BILLION 7% $6.8 BILLION 20% $130 MILLION 0.4% $347 MILLION 1% ACCOMMODATION AVIATION INFRASTRUCTURE ARTS AND RECREATION TOURISM RESEARCH AUSTRALIA ? ? CHANGE ($ BILLION) ? AVIATION INFRASTRUCTURE $4.1b FLEET $5.9b TOTAL $1.8b THE 2014 AVIATION INVESTMENT PIPELINE AVIATION INFRASTRUCTURE INVESTMENT Possible Under construction Under construction Under consideration FIGURE 4: CHANGE IN AVIATION INVESTMENT, 2014 COMPARED TO 2013 6 AVIATION INFRASTRUCTURE AIRCRAFT ORDERS 4 TOTAL 2 0 -2 -4 -6 -8 UNDER CONSIDERATION/ POSSIBLE COMMITTED UNDER CONSTRUCTION TOTAL COMPLETED/ DELIVERED AIRCRAFT INVESTMENT TOURISM RESEARCH AUSTRALIA ? ? CHANGE ($ BILLION) UNDER CONSIDERATION/ POSSIBLE COMMITTED UNDER CONSTRUCTION ? TOTAL ARTS, RECREATION AND BUSINESS SERVICES INFRASTRUCTURE CONSIDERED/POSSIBLE $4.6b COMMITTED/CONSTRUCTION $430m TOTAL $5.0b THE 2014 ARTS, RECREATION AND BUSINESS SERVICES INFRASTRUCTURE INVESTMENT PIPELINE ‘Under consideration/possible’ Under consideration/possible Committed Under construction Under construction Under construction Committed FIGURE 5: CHANGE IN ARTS, RECREATION AND BUSINESS SERVICES INFRASTRUCTURE INVESTMENT, 2014 COMPARED TO 2013 6 5 4 3 2 1 0 -1 -2 -3 TOURISM RESEARCH AUSTRALIA CHANGE (ROOMS) ? ? ? CHANGE ($ BILLION) ACCOMMODATION VALUE $1.1b ROOMS 3,890 TRANSACTIONS 39% THE 2014 ACCOMMODATION INVESTMENT PIPELINE Under consideration/possible phase7 FIGURE 6: CHANGE IN ACCOMMODATION INVESTMENT, 2014 COMPARED TO 2013 5,000 4,000 3,000 2,000 1,000 5 ROOMS (NO - LHS) VALUE ($ BILLION - RHS) 4 3 2 1 0 UNDER CONSIDERATION/ POSSIBLE COMMITTED/ UNDER CONSTRUCTION RECENTLY COMPLETED 0 SOLD TOTAL Possible/under consideration Possible/under consideration Committed/under construction NUMBER OF TRANSACTIONS 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 TRANSACTION VOLUME ($ BILLION) Under consideration/ possible Committed/under construction FIGURE 7: TRANSACTION VOLUMES AND NUMBER OF TRANSACTIONS, 2000 TO 2014 50 3.0 45 2.5 40 35 2.0 30 25 1.5 20 1.0 15 10 0.5 5 0 0 ACCOMMODATION INDUSTRY TRANSACTIONS ?? ?? ?? ?? NUMBER OF TRANSACTIONS* TRANSACTION VOLUME ($ BILLION) TOURISM RESEARCH AUSTRALIA OPPORTUNITIES Monitor Monitor GROWTH IN MIXED-USE DEVELOPMENT Monitor Committed/under construction SCARCITY OF PRIME LAND IS FUELING MIXED-USE DEVELOPMENT ?? ?? ?? ?? INTEREST FROM ASIAN INVESTORS IS INCREASING ?? ?? ?? ?? ?? FIGURE 8: MIXED-USE INVESTMENT, 2012 TO 2014 VALUE ($ MILLION) ROOMS (NO.) VALUE ($ MILLION) ROOMS (NO.) VALUE ($ MILLION) ROOMS (NO.) UNDER CONSIDERATION/POSSIBLE COMMITTED/UNDER CONSTRUCTION RECENTLY COMPLETED 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 TOURISM RESEARCH AUSTRALIA 2013 2014 NEW PROGRESS PROJECTS PROJECTS PROJECTS FROM ABANDONED COMPLETED PLANNING TO COMMITTED NEW PROGRESS PROJECTS PROJECTS PROJECTS FROM ABANDONED COMPLETED PLANNING TO COMMITTED VALUE ($ BILLION) PROJECTS (NO.) IMPROVEMENT IN PROJECT PROGRESS THROUGH THE PIPELINE Monitor Under consideration Under construction Under consideration Under construction Proposed Under construction. FIGURE 9: PIPELINE PROGRESS, BY VALUE AND VOLUME, 2014 COMPARED TO 2013 15 80 70 12 60 9 50 40 6 30 20 3 10 0 0 CONCLUSION Committed Under construction Tourism 2020 TOURISM INVESTMENT MONITOR 2015 | May 2015 Poor or missing Inadequate Mostly adeq uate General demonstrat ion Accurate demonstration Scholarly analysis of theories. demonstrati on of demonstration of of critical analysis of of critical analysis of demonstration of Always presents information from critica l analysis of relevant theories and critical analysis of theories and models, theo ries and models. Presents complex theories and models. Synthesises critical analysis of theories and models. Question 3 Accessing Criterion (Problem Solving); Total Marks:8 Question 4 Accessing Criterion Critical Thinking (Existing Knowledge, Research Demonstrates no ability to independently construct a clear statement about a complex problem or research hypothesis. Proposes no solutions or ideas to address new and complex problems. Demonstrates no evidence of initiative in planning and identifies no viable approaches for solving complex problems. (0 - 2 marks) Demonstrates a limited ability to independently construct a clear and statement about a complex problem or research hypothesis. Proposes inappropriate solutions or ideas to address new and complex problems. Demonstrates limited evidence of initiative in planning and identifies few viable approaches for solving complex problems. (2.1 - 3.9 marks) Demonstrates satisfactory a bility to independently and expertly construct a clear statement about a comp lex problem or research hypothesis w ith evidence. Creates an acceptable new object, solution, or idea ; Proposes one or more acceptable creative solutions to existing and/or new situations in professional practice; also the solution reflects proficient judgement of the pros and cons of the various options. (4 - 4.7 marks) Demonstrates a good ability to independently and expertly construct a clear statement about a complex problem or research hypothesis with evidence of reasonably relevant contextual factors. Proposes reasonable adaptations of existing objects, solutions or ideas to address new and comp lex problems Demonstrates a very high level of initiative in planning and identifies multiple approaches for resea rching and solving complex problems. Provide relevant diagrams. (4.8 - 5.5 marks) Demonstrates a very good ability to independently a nd expertly construct a clear and insightful statement about a complex problem or research hypothesis w ith evidence of relevant contextua l factors. Create a brilliant innovative new object, solution or idea; Proposes ada ptations of existing objects, solutions or ideas to address new and complex problems, reflects on and evaluates the creative process and product . Skilfully extends an existing idea. Demonstrates a high level of initiative in planning and identifies multiple, innovative approaches. Provide relevant diagrams. (5.6 - 6.3 marks) Demonstrates exceeding ly high ability to independent! and expertly construe a clear and insightful statement about a complex problem or researc h hypothesis w ith evidence of all relevant contextual factors . Create a ground-breaking innovative new object solution or idea ; Proposes adaptat ions < existing objects, solutions or ideas to address new and complex problems, reflects on and evaluates the creativE process and product. Outstandingly extends an existing idea Demonstrates a very high level of initiative in planning and identifies multiple innovative app roache Proposes one or more exemplary creative, novel solutions to existing and/or new situations in professional practice. Provide relevant diagrams. (6.4 - 8 marks) (0 - 2 marks) (2.1 - 3.9 marks) Provide diagrams and relevant figures to relevant figures to make a consistent Provide diagrams and relevant figures to professional practice. Provide diagra ms anc make a consistent argument with good make a consistent relevant figures to argument w ith good reasoning. argument w ith good make a consistent reasoning. (4 - 4.7 marks) (4.8 - 5.5 marks) reasoning. ( 5.6 - 6.3 marks) argument with good reasoning. (6.4 - 8 marks) Overall Score 0 or More 11or more 20 or more 24 or more 28 or more 32 or more FAI L (N) FA IL (N) PASS (P) CREDIT (C) DISTINCTION (D) H GH DISTINCTION (HD) or/and Views); Total Marks:8 Question 5 Accessing Criterion (Global Citizenship); Total Marks:8 ina ppropriate sources representing very limited points of view or approaches. (0 - 2 marks) Demonstrates no understanding of the complexity of global/ cultural I ethica l perspectives or of professiona l practice. models; Poor reasoning and argument w ith no supporting evidence. Often presents information from inappropriate sources representing limited points of view or approaches . (2.1 - 3.9 marks) Demonstrates limited understanding of the complex ity of global/ cultural I ethical perspectives or of professional practice. yet some inconsistencies remain in the arguments. Presents information , from relevant sources representing various points of view or approac hes, and demonstrat ing a mastery of theoretical knowledge. (4 - 4.7 marks) Demonstrates acceptable level of understanding of the complexity of global/ cultural I ethical perspectives or of professional practice. information from relevant sources representing various points of view or approaches, and demonstrat ing a mastery of theoretical knowledge. Provides diagrams explaining one critical aspect of the theories. (4.8 - 5.5 marks) Demonstrates a high level of understanding of the complexity of global/ cultura l I ethica l perspectives or of professional practice. Provide diagrams and information and knowledge from a range of relevant sources representing various points of view, approaches and demonstrati ng a high level of mastery of theoretical knowledge. Provides diagrams explaining different critica l aspects of the theories. ( 5.6 - 6.3 marks) Demonstrates very good sophisticated understanding of the complexity of global/ cultural I ethical perspectives or of professional practice. Synthesises comple: information and know ledge from a broad range of relevant sources representing various points of view, approaches and demonstrating a high level of mastery of theoretical knowledgE and expert understanding of recer developments in the discipline and/or a rea of professional practio Provides diagra ms explaining different critical aspects of the theories. (6.4 - 8 marks) Demonstrates extraordinarily sophisticated and dee understanding of the complexity of global/ cultural I ethical perspectives or of