Tourism Crisis Management Toolkit
Author: Jamie Walker
At: July 21, 2023
Global Crises
Hall’s (2010) review of crises begins with the impact of the 2007 financial crisis. Following on from this, Hall (ibid) goes on to recount a number of well-known global crises that have had lasting impacts on international passenger flows.
At the same time, Tourism has evolved in terms of technologies and new sectors, with once popular destinations now struggling to appeal to potential tourists and previously less visited destinations seeing an upturn in arrivals as niche tourism develops a global appeal.
UNWTO (2019) estimates that worldwide international tourist arrivals increased 6% to 1.4 billion in 2018. In relative terms, the Middle East (+10%), Africa (+7%), Asia and the Pacific and Europe (both at +6%) led growth in 2018. Arrivals to the Americas were below the world average (+3%).
The current global pandemic has impacted the tourism industry more so than any crisis since WW2. However, alongside Covid-19, the Tourism industry is existing in a time where shocks, the result of a range of crises, are creating a turbulent and unstable business environment. This makes tourist activity and flows difficult to manage and exceptionally difficult to predict.
Crises have wide-ranging ramifications for Tourism stakeholders. The impacts on these organisations vary considerably depending on the type of crisis, the severity of the crisis and the way in which the organisation has planned for and responded to the crisis. The resilience of the tourism industry is in question.
The questions that form this assessment toolkit are designed for you to critically examine a range of Crisis Management themes within the tourism industry and within the context of a global turbulent environment.
Useful Sources
UNWTO library / IATA – Crisis Communication in the Digital Age / WTTC economic tools / Toolbox for Crisis Communications in Tourism / Skift / CAPA / World Economic Forum – Global Risk Report 2020.
Preliminary Literature Review.
The word crisis comes from the Greek “crisis”, meaning differentiation or decision (Glaesser, 2003). Crises can be identified as ‘wildcard (events)’ – high impact, low probability (Cooper, C & Hall M, 2019). Therefore, they are events that require important and immediate decisions to be made.
Triangulation is the use of more than one method of research to add depth to data and analysis, contributing to greater confidence in findings (Bryman, Bell, & Teevan, 2009).
Using the triangulation diagram below, research a definition of “crisis” from three different sources. When this has been done, create your own working definition. (100 words).
The following sections of this Assessment Toolkit require you to focus on a specific sector of the Tourism industry. This will enable the Toolkit to become your portfolio of Crisis Management, sector-specific knowledge.
Please select one of the following:
- Airline: ✓
- Accommodation provider:☐
- Destination Management Organisation:☐
- Airport:☐
- Attraction:☐
The WEF (2020) writes, “Today’s risk landscape is shaped by an unsettled geopolitical environment in which new centres of power are forming —as old alliances and global institutions are being tested”. For the economy, “ammunition to fight a potential recession is lacking, and there is a possibility of an extended low-growth period. Climate change and related environmental issues are ranked highest in terms of likelihood.
Identify and analyse potential crises that could impact upon your specified sub-sector of tourism. (400 words).
| Identification and Analysis of Potential Crises. | |
| Stakeholder: Airline companies | The airline industry as a sub-sector of tourism, and airline companies as one of the major stakeholders in the airline industry could be impacted by various crises. As per the Global Risks Report 2020, the airline industry and its stakeholders could be impacted by various potential crises environmental crises, political crises, social crises, and financial/economic crises (World Economic Forum, 2020). The environmental crisis which could impact airline companies includes climate change, extreme weather, and natural disasters (World Economic Forum, 2020). Natural disasters such as flooding, tsunamis, and earthquake can disrupt flight operations and travel for an extended periods of time, resulting in loss of demand and earnings (World Economic Forum, 2020). Climate change and increased restrictions on carbon emissions can increase the cost burden and operating costs of airline companies, which can result in increased competition and reduced profitability (World Economic Forum, 2020). Economic crises such as economic downturns and recessions can reduce demand for tourism travelling, and energy price shocks can result in increased operating costs and reduced profitability (World Economic Forum, 2020). Moreover, during times of economic downturn, it becomes difficult for airlines to raise ticket prices. Besides, political crises such as national or global governance failure, terrorism, embargo, and state collapse can result in temporary or permanent suspension of air operations. The risk of social crises such as infectious diseases and pandemic is high in future, which may have the same or even worst impact than COVID-19 on airline companies (World Economic Forum, 2020). |
| Stakeholder: Passengers | The passengers in the airline industry are also the primary stakeholders in the airline industry. All the potential crises which have been discussed above, such as environmental crises, political crises, social crises, and economic crises, can also impact the passengers in the airline industry (World Economic Forum, 2020). For instance, an economic crises crisis in terms of economic downturn, unemployment and global recession can negatively impact the financial status of the passengers, due to which it could become unaffordable for them to travel for tourism (World Economic Forum, 2020). In future, health risks such as COVID-19 pandemic and imposed travelling restrictions by the government may negatively impact the passengers’ sentiments, consumer demand, and confidence of tourism travellers (World Economic Forum, 2020). A similar travelling ban and restrictions can prevent passengers from travelling frequently even if they want to. In case of political crises such as national or global governance failure, terrorism, embargo, and state collapse, air travelling can become very difficult for passengers (World Economic Forum, 2020). There is a risk of natural disasters such as flooding, tsunamis, and earthquake, due to which passengers can be stuck in tourist destinations and face great difficulty in evacuation (World Economic Forum, 2020). |
The Tourism industry recognizes that a variety of risks to stakeholders are prevalent globally and that safety issues exist anywhere people travel (IATA 2018). Hazards include, but are not limited to, hurricanes, earthquakes, tsunamis, and floods; health risks such as SARS, pandemic flu and localized outbreaks; as well as actions such as technological / industrial failures, accidents, terrorism and political unrest.
Complete the table below. Choose two crises from the following Crises Domains: Political, Environment, Socio-Cultural, Economical and Technological. (400 words).
| Crisis Impacts on Specific Aviation Stakeholders. | |
| Stakeholder: Airline Companies Crisis: Social Crisis due to COVID-19 pandemic | Airline companies are one of the primary aviation stakeholders, and due to the COVID-19 pandemic, a major social crisis has emerged, which had an unprecedented impact on the aviation travelling demand, health risk, and human behaviour around the world (Wenzel, Stanske, and Lieberman, 2020). As soon as travelling restrictions and countries’ borders started to close in an attempt to restrict the spread of the virus, the tourism travelling demand had gone down to zero (Albersa & Rundshagen, 2020). The airlines had to stop their operations, and most of their fleet were grounded. In this situation, it was very difficult for the airline industry to maintain its operations without adapting to the crisis (OECD, 2020). To address the social distancing need, the airline companies introduced various changes, such as; the use of disinfectants, and sanitisers, maintaining distance between passengers, empty middle seats in the aircraft, free travelling cover and medical insurance, cash refund option, and change of tickets without charges. The guidelines for cleaning, sanitation and disinfectants given by the IATA were followed by the airlines (IATA, 2020). Moreover, COVID-19 testing was mandatory before travelling to ensure that the passengers and not infected (Aviationpros, 2020). These measures have further increased the operating cost of the airlines. As the flight operations were negligible, the profitability and liquidity of the airlines were badly impacted, which resulted in drastic financial loss. The airline industry, which was having increasing growth before COVID-19, its future outlook has been badly hurt, and its recovery is still uncertain as the crisis is still not over (Albersa & Rundshagen, 2020). |
| Stakeholder: Employees Crisis: Economic Crisis due to COVID-19 pandemic | Employees in the airline industry are one of the primary aviation stakeholders who were greatly impacted by the economic crisis which was emerged in response to the COVID-19 pandemic. Due to travel restrictions and drastically declining travelling demand, most aeroplanes were grounded by airlines around the world. Due to negligible air operations, the profitability and liquidity of the airline companies were wiped off. Most of the employees were not able to resume work, and many of the airlines have announced that they will not be able to give salaries to their employees during the lockdown period, such as; flight attendants, pilots, engineering staff, and other non-crew members. This decision has greatly impacted the employees in the aviation industry and their financial security. The prolonged limited activities have resulted in financial loss for the airlines due to which they had to take major cost-cutting measures such as downsizing, which had greatly impacted the job security, morale, and careers of the employees in the airline industry. Many of the employees in the airline industry were laid off and became unemployed. The leading airline, Emirates laid off more than 6500 employees, including pilots, during mid of 2020 (Imat, 2020). |
How a stakeholder responds to a crisis often affects the public’s perception of the stakeholder, Chang et al. (2018). Thus, how to effectively deal with complicated crisis situations is of the utmost importance in order to restore image and reputation after the crisis. Effective crisis management during a crisis has a positive effect on a stakeholder’s reputation and brand equity and will facilitate the recovery after the crisis (Grundy and Moxon, 2013; Hansson and Vikström, 2010).
Evaluate the response strategy utilised by a stakeholder of your sub-sector. (500 words).
| Four response strategies were utilised by airline companies around the world to respond to the changes made due to the COVID-19 pandemic, namely; exit, innovating, persevering, and retrenchment; they are explained below. 1) Retrenchment strategy Strategies developed with the goal of significantly reducing overheads/costs or assets are known as Retrenchment strategies. Many airlines during the emergence of the COVID pandemic opted for significant retrenchment, with peak occurrences recorded from mid-March to April (Albersa & Rundshagen, 2020). Every major European airline opted to ground their entire fleet of aircraft and halt operations during the peak of the crisis in March and April 2020 (Albersa & Rundshagen, 2020). This occurred as far-reaching travel restrictions were imposed globally, leading to the negligible demand for passenger travel. Furthermore, the airlines also initiated more long-term retrenchment plans in addition to the industry-wide measures taken in the short term. Through this strategy, it is not uncommon to observe long-term measures as the strategy aims to minimize cash burn (Wenzel et al., 2020). 2. Persevering strategy With many airlines opting for the obvious strategy of reducing costs, another alternative used by some airlines, such as Ryan Air, is to persevere (Wenzel et al., 2020). In the persevering strategy, companies aim to power through the crisis with little to no change in their pre-crisis strategy (Albersa & Rundshagen, 2020). By preserving the status quo and keeping intact current organizational structures, assets and strategy, organizations can gain competitive advantage once the crisis has ended. Ryan Air using this strategy, announced even more intense price competition after its operations returned back to regular levels. Other airlines also engaged in persevering strategies by leveraging their external resources. Airlines have also lobbied governments of their home countries to gain support via subsidies to stay afloat. Use of the strategy was seen mostly during the early stages of the crisis at the end of February and reached its peak during April and May. The higher incidence of the strategy is not surprising, seeing as many airlines saw their revenues evaporate (Albersa & Rundshagen, 2020). 3. Innovating strategy The third strategy airlines use to navigate the crisis is innovation. This strategy aims towards a complete strategic overhaul of the organization during a crisis (Wenzel et al., 2020). Some airlines have opted for this strategy by quickly taking tactical decisions to take advantage of the crisis-formed demand in cargo. These airlines, through converting passenger aircraft to cargo planes, have continued to operate and even enjoyed a boom as cargo demand shot up with the urgent delivery requirements for medical equipment (Horton, 2020). These strategies were mostly implemented in mid-April. Apart from the tactical changes, strategic decisions were also made by new airlines for the long term. This included setting up of future joint ventures and assessing entrance to new markets (Albersa & Rundshagen, 2020). 4. Exit strategy The last strategy available to mitigate the crisis is called exit strategy. This strategy, like its name suggests, aims towards the winding up of business activities (Wenzel et al., 2020). Not limited to closing the entire business, exit strategies can also denote downsizing or pulling out of other industries or markets to free up resources. This includes airlines going bankrupt or withdrawing from markets. Such responses were observed throughout the crisis period (Albersa & Rundshagen, 2020). |
In early 2019, Lonely Planet named Sri Lanka as its #1 Destination for 2019, a potential boost for tourism flows into the country. On April 21st 2019, seven suicide bombers struck a number of churches and three luxury hotels within the country.
In April 2018, 29 airlines were serving Sri Lanka offering 300 flights a week. However, following the Easter attacks, the connectivity was reduced to 239 flights a week, which amounts to a loss of … 8,000 [seats] per week,” Jayaratne, J (2019). As an attempted recovery strategy, the Sri Lankan Government has announced that it will reduce the price of aviation fuel, ground handling and embarkation fees for six months at Colombo airport to encourage airlines to reinstate schedules, increase the number of flights and lower ticket prices.
Many experts and academics see the “recovery” stage as the final part of the crisis process for stakeholders. It is at this point that stakeholders adopt policies to normalise operations in the hope of moving forward from the crisis.
Analyse a recovery strategy carried out by a relevant stakeholder recovering from a crisis. (500 words)
| The recovery strategy which was carried out by the Emirates airline to recover from the COVID-19 crisis and to normalize its operations by adopting persevere strategy (Wenzel et al., 2020). The Emirates airline used persevering strategy and maintained its leading status in the industry by offering additional benefits and offers to travellers, such as discounts and free travel insurance covering limited quarantine expenses up to USD 118 or EUR 100 for 14 days and medical expenses of the passengers up to USD 177,500 or EUR 150,000 (Aviationpros, 2020). The free travel cover increases the confidence of the travellers. Despite the fact that the airline had suffered major financial loss and most of its aeroplanes had been grounded, and it had to lay off thousands of its employees, nevertheless, it continued to offer the same quality of services to its travelling customers around the world (Aviationpros, 2020). This gave Emirates a competitive advantage over its rivals. Great travelling flexibility was offered to its customers by allowing them to change their travelling dates (Aviationpros, 2020). Emirates Airlines has maintained high health and safety standards during its on-flight and off-flight operations, due to which it was ranked number 1 based on health and safety parameters. The Emirates Airline has been ranked number 1 in the world as a safest airline to travel during COVID-19 by the Safe Travel Barometer, which is a body to monitor and certifies suppliers in the travel and tourism industry (Aviationpros, 2020). As per Safe Travel Barometer Emirates Airline has maintained the highest safety standards in the airline industry in the world. Out of 5, the Safe Travel Score of Emirates was 4.4 (Aviationpros, 2020). The score was based on 26 parameters regarding the health and safety of the travellers and the crew members, which were audited by an independent body. It was evident that the Emirates maintained high travelling convenience, excellent service quality, and safety protocols which were defined by the airline. The Standard Operating Procedures (SOPs) defined by the IATA, Governments and other professional bodies have been adopted by the Emirates airline (IATA, 2020; Aviationpros, 2020). It is mandatory to get tested for COVID-19 before travelling, and tests were accepted only from approved labs which were reliable. At every step of the travel and at all touchpoints, the airline maintained all safety measures and did not compromise on the health, care, and safety of the customers, its staff, and the community. (Aviationpros, 2020). The airline has introduced biosafety measures such as giving free hygiene kits to all passengers (Aviationpros, 2020). Moreover, protective barriers have been used at check-in points to prevent direct contact. In addition, cabin crew and other staff members who come in direct contact with the travellers have started to follow new safety protocols, and they use personal protective equipment to ensure increased safety. During flights, the lavatories are frequently cleaned and disinfected after every 45 minutes (Aviationpros, 2020). |
The International Civil Aviation Organisation (2018) states that in order to be resilient, industries need to move from managing a disaster to managing risks and building resilient infrastructures that are sustainable.
Critically discuss the resilience of the tourism industry in relation to crises. (600 words).
| The resilience of the tourism industry in relation to crises is low due to increased uncertainty and increased risk of major crises in the present time, such as COVID-19, climate change and economic downturn (OECD, 2020; World Economic Forum, 2020; Horton, 2020). A high level of uncertainty remains in the outlook of the tourism industry. The overall tourism industry was severely impacted by the outbreak of coronavirus (COVID-19) in 2020, with an expected 80% decrease in international tourism (OECD, 2020). Although domestic tourism is partially supported to minimise the impact and to protect businesses and employment, the governments are in action for the reactivation and restoration of the tourism industry (OECD, 2020). With regards to the post-COVID-19 situation, various countries are now taking resilient initiatives to establish a tourism economy. These initiatives include proper planning to resume sustainable tourism activities, supporting digital transition, shift to a system of green tourism and contingency planning for future tourism (OECD, 2020). Although governments are striving to mitigate the setback to the tourism industry, however, with no government support, the survival of tourism businesses is indeed at risk. Governments are also planning to resume the sector in 2021 and to reduce job losses, but it seems that much more needs to be done in a coordinated manner (World Economic Forum, 2020). While surviving the virus outbreak in short to medium terms, flexible policy options are necessary to encourage the tourism economy. It is also necessary to look further and take initiatives to learn from the situation that has exposed vulnerabilities in the preparation and mitigation capability of the sector and the government (World Economic Forum, 2020). Coordinated measures are also essential among all levels of the private and government sectors. This challenging situation is a chance for the future to reconsider tourism (World Economic Forum, 2020). The future of the tourism industry is dependent on the initiatives taken today because the industry is at a crossroads. Situational long-term implications must be considered by the government through capitalisation by digitalisation (OECD, 2020). Moreover, by supporting structural transformation and reduced carbon transitions, governments can build a sustainable, resilient and stronger tourism economy (World Economic Forum, 2020). Variations in temperature, moisture (snow and rain), patterns of storm and wind, and sea level are the main predicted climate change impacts on the aviation. Furthermore, climate change is projected to contribute to intensified drought, effects on electricity and water supplies, or changes in the biodiversity and patterns of wildlife (OECD, 2020). Aviation consequences involve a decreased performance of aircraft, shifting patterns of demand, possible infrastructure damage, disruption of schedule, and capacity loss (World Economic Forum, 2020). According to a survey to deal with the likely impacts of climate change, no planning has been done by around half of the aviation companies in the European (OECD, 2020). In addition, in the winter and autumn seasons, an increase is anticipated in the frequency of heavy storms in the North Atlantic and central and northern Europe (OECD, 2020). There might be a few tropical cyclones in the Mediterranean, but the magnitude of these cyclones might increase. This may result in cancellations, delays, reduced capacity, a constant increase in fuel consumption, and increased strikes of lightning and infrastructural damage. This may also result in increased costs and maintenance of aircraft (OECD, 2020). Nevertheless, the tourism industry lacks resilience and is not prepared to cope with the potential crises which may impact the industry in future. |
Reference list:
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Aviationpros (17 November., 2020). Emirates Rated Safest Airline in the World in Response to COVID-19 Emirates. Online; https://www.aviationpros.com/airlines/press-release/21163064/emirates-emirates-rated-safest-airline-in-the-world-in-response-to-covid19
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