Tsunamis, Hurricanes,Terrorism, and ???: Lessons for the Global Tourism Industry
Qantas Professor of Travel and Tourism Economics
University of New South Wales
Head, Susttainable Destinations Research Program, STCRC
Crisis events have always had relevance for tourism. Since the beginning of mass tourism in the 1960s, crises such as wars, natural disasters, terrorist incidents, crime waves, epidemics, economic and business collapses have all impacted on destination choice and even the decision to travel. Security and safety are major determinants in destination decisions made by travellers, especially among the discretionary travellers who comprise the majority of leisure travelers (Crouch and Ritchie 1999, Dwyer and Kim 2003).
A tourism crisis can take a variety of forms. Crises can be classified as Natural and Anthropogenic. Simply put: “A crisis is any unexpected event that affects traveller confidence in a destination and interferes with the ability to continue operating normally.” (REF). Natural crises would include SARS, Mad Cow Disease, Tsanumis and Hurricanes. Anthropogenic crises would include the terrorist attacks of 9/11, the Port Arthur Massacre, the Iraq war. Threats to tourists encompass every aspect of the tourism cycle, affecting all tourism stakeholders. Crisis management strategies are needed to help retain the confidence of travellers and the travel industry, and to minimize the impact of a crisis on the destination.
While each disaster has its own special characteristics, there are certain patterns that are already beginning to emerge from major crises. These can provide vital lessons for the tourism industry which can play a special role in disaster management and its need for good risk management. Here are some lessons, mainly from the recent Tsunami and Hurricane Katrina, that we all need to re-learn. Internalising these lessons can help us to better achieve an important aim of this conference, that is, ‘to develop a Sustained Travel Industry Response to the Social and Economic Revitalization of Tsunami Affected Countries’. The lessons go beyond the incidence of Tsunamis, however, in helping us to achieve the primary IIPT aim of developing a 21st Century Agenda for Peace through Tourism that addresses the key global issues of our time.
Lesson 1. We are all vulnerable to natural disasters
Disasters do not recognise borders and can affect entire regions. The tsunami affected at least 50 countries, of which only 11 were directly affected. An additional 39 developed countries were indirectly affected by losing nationals who were present in the region, either tourists or expatriates. For Asia, the tsunami was yet another addition to a string of natural disasters that the region has faced, which included floods, droughts, cyclones, hurricanes, typhoons and earthquakes that have claimed thousands of lives and caused billions of dollars worth of damage.
The UN says 80% of the world’s natural disasters occur in the Asia Pacific region.Nearly 3 billion people, or almost half the world population, live in coastal zones which in many cases are prone to hazards including tropical cyclones, floods, storms and tsunamis. Coastal zones and small islands are often densely populated areas that increase people’s risk and vulnerability. Often coastal populations are dependent on the sea for their livelihoods (e.g. fishing villages) and do not have the choice to live elsewhere. Some small island countries are barely a few metres above sea level, which means that evacuation to higher land is almost impossible. Governments and local authorities need to take human habitats into consideration in long-term development planning, ensuring that risks are minimised. The effects of Hurricane Katrina on New Orleans indicates that destinations at risk are not confined to the developing world.
Lesson 2: Avoid ‘Quick Fix’ Solutions
What can be destroyed in a few seconds takes years to rebuild.While the emergency relief for the Tsunami phase is over in Indonesia, Sri Lanka, the Maldives and India, rehabilitation is expected to take from six months to two years.Total reconstruction is expected to take up to five years in badly hit areas. The New Orleans rehabiliation effort is expected to take several years
By and large, crisis response involves a five-pillar strategic blueprint:
1) Restore purely public infrastructure (roads, schools and health facilities);
2) restore public infrastructure in support of private sector activities;
3) stimulate the local economy;
4) restore government and civic administration; and
5) secure the environment from new natural disasters.
Most crises affect industries other than just tourism. For example, while the Mississippi and Alabama Coasts are mainly sun 'n surf destinations, New Orleans is a major city, which functions not only around tourism but also around businesses, commerce and transportation. Tourism is an industry that depends on the well being of the total community. The tourism industry is only as safe as weakest part of its community's infrastructure. This is why the recovery process may take some time. This crisis highlights how interrelated tourism is with these other industries.
Recognising our dependence on functioning public infrastructure. The New Orleans experience ought to serve to remind people in the first world just how dependent they are on services such as power plants, electricity and air conditioning. When thousands of people are housed in a hotel that has lost electricity, air conditioning and potable water it become all too clear how dependent the tourism industry is on these basic infrastructures.
Lesson 3. Prevention is Better than Cure
Crisis Management often reflects poor risk management
The tourism industry should work with local authorities to develop crisis management plans. This might include an audit of current resources for dealing with a crisis; designating responsibilities and a chain of command for decision-making; collecting a list of key contacts in an emergency; involving public services and private tourism companies in the planning process; rehearsing for a crisis; and updating the plan annually. The plan will also involve reviewing security systems; and maintaining a working relationship with other government departments responsible for safety and security. For example, decisions made by police agencies, emergency services, as well as the departments of interior, health, consumer affairs, judiciary, foreign affairs, and civil defence have a great influence on how a crisis involving tourists is managed. Destinations are well advised to inititate a Safety and Security working group to bring these partners together on a regular basis to discuss tourism related issues.
It is important that tourism authorities participate in establishing security procedures. They need to make sure they are aware of all security measures being taken that affect the industry. This can involve a review of the entire tourism chain—airport arrivals, ground transport, hotels, restaurants, shopping zones and all tourist sites. The goal is to provide a safe environment with procedures that are as invisible as possible and do not restrict the arrival of tourists. In particular, the tourism industry can help to formulate community wide evacuation plans based on the disaster probabilities for different areas Disaster management should be viewed in the context of climate, geography, topography and demographic needs. In New Orleans recently, some of the worst damage occurred in hotels. That ought to serve as a wake-up call to many in the tourism industry, raising questions such as: do facilities used by tourists have evacuation plans? How will guests communicate to loved ones that they are safe? In the case of the superdome, the generators were in the basement, so when the building flooded, power was lost. Weaknesses should be judged against the risks scenarios developed for your location.
Good crisis management, while essential, should never replace the need for good risk management, however. Tourism stakeholders must ensure that good risk management plans are in effect. Major stadiums, large convention centers, and other facilities such as airport terminals need to review not only their own security needs, but also how they could be used to serve the greater community in case of a crisis.
Early warnings save lives
The United Nations has agreed to create a global early warning system covering all natural hazards and all countries by June 2007. This includes establishing a tsunami warning system in the Indian Ocean. The system will be based on national tsunami centres and the free exchange of necessary data among countries. The tsunami warning system will also include substantial awareness-raising and public education, and will be well integrated into other types of national warning and disaster management systems.
Detailed work has begun on implementation of a full system that will comprise a comprehensive network of earthquake gauges and ocean seabed sensors and monitors, the development of national tsunami warning centres in each country (up to 26 in all), and the development of regional or subregional centres to provide advance analysis of data and warnings and support for public education.
Reducing risk also depends on communication and information exchange between the scientific community and politicians. Recent disasters indicate that in the absence of an open dialogue, valuable information and research from technical sectors is redundant. We need to strengthen the link between scientific institutions and national and local authorities that need to react to avoid human, economic and social losses from disasters
Need for Public Education
Public awareness and education are essential to protecting people and property.
Knowing what to do and when to do it is the key to saving lives and protecting property.
Lesson 4: Need for Cooperation in Recovering
Coordination is an essential element of disaster prevention, mitigation, preparedness and response.Countries need to work together at the regional and international levels ahead of time, instead of waiting until disaster strikes to respond. Efforts need to be made to promote complementarity and avoid duplication.
Implement a recovery alliance
All segments of the tourism industry have a shared vested interest in the recovery process. The common element which appears in all successful recoveries from tourism crisis events is the establishment and implementation of an effective recovery alliance. With few exceptions, successful destination recovery programmes have been heavily supported by government acting in both the coordination and driver capacities. When government and the private sector tourism of the tourism industry act in concert towards a common goal of destination recovery, it tends to reduce the recovery period and enhance post crisis growth.
Obvious stakeholders from the private sector include all tourism and hospitality businesses operating in the destination concerned. In addition tour operators, airlines, cruise companies, land transport operators which service the destination from within the country or from overseas should also be integral to the recovery alliance.
Understanding and collaborating with stakeholders: internal (employees, managers, shareholders) and external (tourists, industry sectors, government agencies, general public, media) stakeholders; need for collaboration between stakeholders at different levels to resolve crises or disasters.
Build Confidence in the Destination
Tourism industry stakeholders must rapidly restore market confidence in the destination following a crisis. In doing so, it is vital to ensure that confidence-building measures are honest and ethical. The long term viability of any business enterprise is dependant on maintaining a reputation for reliability and trust.
Contextualize the crisis event
The tourism industry must accurately communicate the extent and the degree of the problem. In the event of natural disaster it is important that the market is aware of the confines of the damage caused and to identify thoses areas that are unaffected. This strategy was immediately employed by the World Tourism Organization, PATA and the tourism authorities of Tsunami affected countries.
Necessity for Good Communications
Destinations should be pro-active in communications, promoting what is being done to restore tourism to normalcy. Recuperating from a crisis requires extra budgetary and human resources in communications. Particularly so, given the tendency of the mass media to sensationalise. All tourism industry stakeholders, eg.tour operators, airlines, hoteliers, travel agents and wholesalers in source markets who are promoting destinations need to be regularly and accurately updated on facts pertaining to a crisis situation so they can disseminate this information onto their clients. To protect their credibility, destination managers must adopt a policy of full and honest disclosure about what is known and what is not known, providing details about the extent of the disaster, what is being done to assist victims, how security services are working to end the crisis, and what is being done to prevent a recurrence.
An effective and updated website is a most important crisis communications tool. The Internet allows each tourism destination to become its own news channel. Having well briefed and effective spokespeople is vital in dealings with the international media. It is most important to ensure there is a common message. Information can be continually updated.
Understanding the workings of those forces that shape perception is integral to effective crisis and risk management. Perception is a key determinant of a tourism crisis. More recently, media reportage of the Indian Ocean Tsunami created a perception that the destruction to the Thai resort island of Phuket was far more extensive than the objective facts revealed.
The global tourism industry has been forced to take the issue of negative and grossly exaggerated perceptions seriously. In this context, “perception management” is focussed on correcting distorted perceptions. The recovery of destinations which have been affected by “perceptual crises” require a strategy in which the industry disseminates factual material and seeks the co-operation of the media and the tourism industry in this dissemination.
The widespread perception of a SARS epidemic in 2003 was far more extreme than the actual extent and threat of the disease. Yet, primarily due to the perception of SARS as dangerous threat to public health, the economically significant tourism industries in S.E Asia, including Australia, experienced significant declines in tourism during the first half of 2003. PATA’s Project Phoenix which was the overall strategy used to co-ordinate tourism recovery for destinations affected by the SARS scare of 2003 represents one of the most effective models of perception management implementation. PATA obtained the cooperation of CNN and other major global media organisations to publicise positive messages that SARS was under control in SE Asia and that affected destinations were both safe and ready to welcome tourists. The national tourist authorities of Hong Kong and Singapore financed successful and intensive information and marketing campaigns in association with PATA.
The principal motivating factor for travel advisories is their role as an extra-territorial security measure for citizens in a given country to protect them from potential threats when overseas. In most tourism generating countries, foreign ministries tend to utilise a mixture of primary sources in the formulation of their advisories. These include: legations in the country, intelligence assessments, expatriate business people and reports from travellers.
The industry has registered its concern about the content of many travel advisories, claiming that governments to be more accountable for the material written in their travel advisories. The tourism industry should play a role in the development of ‘balanced’ travel advisories. Little is known about the extent of consumer awareness of travel advisories and their influence on travel behavior.
Lesson 5. Need for Effective Marketing Response
The tourism industry recovering from crisis will naturally seek rapid recovery from losses they sustained during the crisis period. This often involves an intensive marketing campaign to focus positive awareness of a recovering destination coupled with a range of consumer incentives. Destinations should avoid overselling or misrepresenting their product and be ethical in the choice of promotional content or they could create their own crisis. Also, Incentive programs to encourage tourists to return to destinations should avoid the trap of irresponsible discounting which may attract large numbers of travellers but at prices which are unsustainable for the enterprises. While price reductions may generate additional tourism flows in the short term, the expenditure injections may not be commensurate with the numbers, resulting in what has been called ‘profitless volume’. The focus should be on marketing strategies which will be perceived as beneficial to consumers without compromising the financial viability of the businesses involved.
To be successful, incentive campaigns must avoid the impression of desperation. The essential balancing act is between offering the consumer a perceived benefit for travelling to a recovering destination and it being financially viable for the business to offer the benefit. Value-added incentives are a more cost effective form of marketing incentive than discounting. A free breakfast at a hotel is a relatively small cost for a major hotel but its value to the consumer is perceived as high. The major problem with discounting is that it results in a measurable decline of profitability and it tends to set a level of consumer price expectation which is difficult to change at a later date. This can help to maintain tourism related expenditure while minimising the possibility of erosion of destination image.
It might be noted that vigorous marketing and promotional campaigns by the affected Asia Pacific countries have done little to persuade potential travellers that the vast majority of tourist products, services and facilities are open for business. Thailand, arguably the worst affected in terms of tourist casualties, was seeing occupancies of only around 20% in Phuket and the neighbouring islands and coastal areas as of June 2005. Airline capacity is down significantly. It helps to explain why are we getting such good rates at this hotel.
There needs to be exploration of the ethical responsibilities in marketing and promotion activity during crises, including corporate responsibility. Little research has been done on the special issues arise regarding the responsibilities attached to such promotion: how does this differ compared to ‘normal’ times?; Do any special ethical responsibilities arise in such promotion activity?; Is there a role for de-marketing? At bottom, the tourism industry can play a significant role by communicating to others that the best way to help the recovery of affected communities is by visiting them.
Given that aggregate tourism expenditure will decrease during a crisis, it is essential that destination managers have a clear idea of the yield associated with different markets. Effective niche marketing targeted at high-yield markets will seek to ensure the industry gains optimal returns on tourism investment. By understanding the yield potential of different source markets and segments, the industry will know why and how to target them (White Paper 2004: 29). A focus on ‘yield’ is an important aspect of business strategies to maintain and enhance destination competitiveness (Dwyer and Forsyth 2005).
Lesson 6. Need for Effective Economic/Financial Assistance to the Tourism Industry
Governments need to work closely with the industry in difficult times to ensure that there is not a damaging loss of product that could limit the recovery when better times come. Temporary tax incentives, subsidies, reduced airport charges and free visas are some of the measures taken to encourage tour operators, airlines, and cruise companies to continue operating immediately following a crisis.
Economic policy responses to crises can be considered under two categories (Blake and Sinclair 2003).
First, measures designed to stimulate economic activity across the whole industry in order to offset a downturn. This category of measures provides direct subsidies for production by the tourism industry, such as the compensation provided for airlines, and for consumer expenditure on it, for example tax credits for expenditure on tourism.
Second, measures aiming to increase liquidity and to prevent firms from incurring major costs and possibly going out of business. Loan programs and tax allowances fall into the
The first involves relatively low cost measures to restore confidence and increase liquidity. These include the provision of credits or loans that involve subsequent repayment, measures to limit the liability of businesses to acts of terrorism, deferred tax payments and low cost tax allowances. The second category involves significant costs for government, so that it is particularly useful for the government to have some knowledge of their relative effectiveness.
In their investigation of the effectiveness of financial assistance and fiscal measures of the US government following the September 11 attacks on New York, Blake and Sinclair (2003) divided the different types of crisis management responses into five main types:
● subsidies to production (including compensation to airlines)
● subsidies to consumers’ expenditure (including tax credits for personal and business expenditure)
● subsidies to labor employment
● subsidies to capital profits,
● more general fiscal stimulus measures.
The results of their economic modeling indicated that a policy of directing assistance towards the airline sector in the form of subsidies was the most efficient instrument for dealing with the travel and tourism crisis in terms of its positive impact on key economic variables (employment, GDP etc.). Subsidies for air travel, particularly by business people, were also an effective policy response, The provision of a subsidy for accommodation was also very effective in preserving jobs in the accommodation sector at a fairly small cost in terms of the net government budget.(Blake and Sinclair 2003: 22). It is difficult to say how generalisable these results are, but they do indicate that government economic policy responses can be effective in a tourism crisis.
Aid and its Politics
Different aid agencies have their own rules and regulations about how aid is to be dispensed. For developing countries, the important issue is whether aid monies are spent effectively. The critical issue is managing aid money to ensure that it is well spent and benefits those who need it. This has now become embroiled in what international institutions call the ‘politics of development aid’. Processes include formal application procedures, monitoring and evaluation procedures, each with very strict how-to mechanisms for design, appraisal and formulation in order to promote proper checks and balances. Other considerations included how to dispense the money, whether it should be in the form of loans, grants or hand-outs, each of which carries different terms and conditions. Some agencies were willing to deviate from their strict rules while others were not. This has considerably slowed down the reconstruction process for Tsunami ravaged destinations. Nevertheless, international aid organisations say the mechanisms set in place have provided a template for the management of future disasters.
For any crisis, the types of economic policies developed may need to be kept in place until some time after the event that triggered the crisis but it is important that they not be maintained when no longer needed.. Their continuation will depend upon an ongoing assessment of whether the benefits of such policies outweigh their costs.
Lesson 7. Tourism Crises Present Opportunities
The word crisis also incorporate the concept of opportunity. Many successful
recovery campaigns have incorporated the tactic of destination re-imaging and diversification. The Australian state of Tasmania underwent a complete market re- imaging campaign after the 1996 Port Arthur Massacre. This changed the perception of the state from that of a rustic retreat to a sophisticated yet environmentally conscious destination. In the meantime, Australia has shifted its marketing focus, away from simply increasing the number of tourists to enhancing the ‘quality’ associated with tourism growth.
A crisis presents opportunities for industrial reform to facilitate more efficient business operations. For example, although the sudden outbreak of SARS slowed significantly the rapid development of Chinese tourism, it also facilitated the reorganization of Chinese tourist agencies. During the post-SARS period, the tourist industry in various parts of China, driven by new changes and new market demands, are all absorbing new ideas and approaches to their future strategies.
Following a crisis, there needs to be an assessment of tourism’s role in the future socio-economic development of the destination or region. Rebuilding a destination requires attending to various aspects of tourism planning, new product development, marketing/promotion and infrastructure development.
Destinations can benefit from assessment of different scenarios for tourism product and market development and the necessary planning process. Attention must be paid to the scale of tourism development. The emphasis on Mass tourism has generated the development of large scale accommodation facilities.As an industry, we will need to review how hotels and attractions are built so there is a new balance developed between economic scales of efficiency and responsible tourism security.
Disaster mitigation must be built into the development process, with emphasis on improving infrastructure and livelihood opportunities and reducing vulnerability to future disasters. Reconstruction should take place keeping in mind disaster risks. We can no longer afford to rebuild buildings which will collapse again in the face of a similar disaster. The simple message is: Do not simply rebuild, but rebuild in a responsible and sustainable manner.
Attention must be paid to the total recovery of both individuals and communities. This will imply attention to their physical, mental, psychological and economic recovering. All tourism stakeholders must understand that, following a crisis, we are working for "recovering " (a dynamic state) rather than "recovery" (a static state). Unfortunately, little is known about the roles of different tourism stakeholders in the recovery process and how the tourist industry can engage with other industries in the recovery process.
Blake, A.; Sinclair, M. T.(2003) "Tourism Crisis Management: Responding to September 11", Annals of Tourism Research, Vol.30 (4), pp.813-832
Crouch, G.I. , & Ritchie, J.R.B.(1999).Tourism, competitiveness, and social prosperity. Journal of Business Research, 44, 137–152.
Dwyer L., and C.W. Kim “Destination Competitiveness: a Model and Indicators”, Current Issues in Tourism, Vol. 6, No. 5 2003, pp 369-413