The Importance of Crisis Management in the Tourism, Hospitality and Events Industry
Question:
Discuss about the Global Tourism Hospitality and Event.
The organizations and industries in the current global scenario, operate in a complex and integrated as well as inclusive framework, where not only the endogenous factors within the organizations but also the exogenous factors, which lies outside the operational frameworks of the organizations (like that of the social, economic, political as well as overall dynamics of the country and of the overall global scenario), affect the performance and working of the organizations (Johansen, Aggerholm and Frandsen 2012).
These events often lead to occurrence of crisis situations in the organizations and in their operational frameworks. In this context, “Crisis Management” is defined as the method by which these organizations combat the occurrence of disruptive or unexpected events, which have negative implications on the organizations and the people related to those organizations (Drennan, McConnell and Stark 2014). Keeping this into consideration crisis management has been one of the primary components of immense importance in the operational framework of the global Tourism, Hospitality and Event (THE) industries, as these industries are considerably affected by the exogenous as well as endogenous factors present within the industry as well as in the countries in which they operate (Crandall, Parnell and Spillan 2013).
The global Tourism, Hospitality and Event Industry, in their operational framework, faces different types of crisis, which differ in terms of their nature and magnitude, the implications of the same as well as the aftermath and the modes of addressing the issues (Mat Som, Ooi and Hooy 2014). The primary types of crisis which usually occur in the industry are as follows:
- a) Natural Crisis- The crisis which arise due to the occurrences of natural calamities like hurricanes, flood, earthquakes, tsunamis and other incidents and have implications on the organizations as well as on the stakeholders and individuals related to the organization are included in this genre of crisis.
- b) Civil Crisis- These types of crisis occur due to the political and social tensions within a country and also due to the socio-political tensions occurring between different countries and which lead to occurrence like war, terrorism, shootings, violence, sabotage and similar incidents. These types of crisis also have considerable negative effects on the organizations and their management (Hajibaba et al. 2015).
- c) Technological Crisis- Crisis often occur in the organizations in the contemporary period, due to the technological failures or glitches, with the magnitude of the same varying considerably depending upon the nature of technological failure. The technological crisis can range from simple power blackouts, software failure to as critical and widespread ones like nuclear meltdowns and similar occurrences.
- d) Health Crisis- Epidemics and diseases, especially those which spread across the countries rapidly, like SARS, swine flu, malaria and others can also affect the industries, especially the tourism and hospitality industry as the customers become sceptic to a considerable extent (Ghaderi, Som and Henderson 2012).
There also remains other forms of crisis like that of confrontation crisis, crisis of malevolence, crisis arising from misdeeds of the organizations and also that of workplace violence and others, each of which affect the organizations and their profitability and sustainability considerably.
There exists different theoretical as well as conceptual models in the aspects of management of crisis in the contemporary organizations in the global framework, the primary ones being discussed as follows:
- a) Crisis Management Strategy- This strategy is used to avert crisis in the company’s operation framework, which includes future prediction based on the analysis of the current exogenous as well as endogenous environments of the business. The strategies include control of the current status as well as strategy selection and implementation for coping up with the probable as well as ongoing crisis (Coombs 2014).
- b) Crisis Management Model- This model is based on the three components of the crisis arc, which are crisis avoidance, crisis mitigation and recovery:
Thus, the three phases in the management of any crisis under this model are as follows:
- Diagnosis of the expected dangers
- Choice of appropriate Turnaround Strategy
- Change process implementation and monitoring (Moutinho and Vargas-Sanchez 2018)
- b) Contingency Planning- One of the primary crisis management model, which is often taken into account by the contemporary organizations is that of the preparation of the contingency plans. The components of contingency planning for crisis management are primarily as follows:
Often this type of framework makes provision for the organizations to develop simulated scenarios and rehearse the management of the probable crisis in the form of drills. A proper and efficient contingency planning system have attributes like fast execution and facilitation of genuine information as well as guidance for future business continuations (Herbane 2013). The spokesperson plays an important role in these kinds of plans and is bestowed with the vital responsibility of dissemination of information and often provision of manipulated and fabricated information can lead to backfire of these types of crisis management frameworks.
- d) Structural-Functional Systems Theory- This theory of crisis management emphasizes on the need for the provision of correct information at the time of crisis in an organization. Keeping this into consideration, this theoretical framework of crisis management in an organization addresses the details and accuracies of information channels and also facilitates the organizational communication flow by creating proper networks, thereby helping the companies to take actions at the times of crisis (Parsons 2017).
- e) Crisis Leadership- This theory highlights the five competencies which are needed to be present among the leaders of the organizations, which help in restructuring of the organizations at the time of crisis as well as in the times after crisis. These skills are as follows:
- Building up trust in the organizational framework
- Mindset reform of an organization
- Identification of potential threats for the organizations
- Decision making skills and skills of taking abrupt actions
- Taking lessons from crisis and incorporating the same in the organizations (Bussy and Paterson 2012)
Apart from these conventional theoretical and conceptual frameworks which are present in the aspects of crisis management, there also remains several other theories like those of diffusion of innovation, unequal human capital as well as the role of media in the aspects of crisis management in the contemporary organizations (Jia et al. 2012).
Different Types of Crisis Faced by the Industry
Keeping the aspects of crisis management in the contemporary organizations and the importance of the same, especially in the current dynamics of the Tourism, Hospitality and Event Industry, the current section of the report tries to emphasize on the current crisis situations and risks which is experienced by the tourism industry as a whole in Egypt in the contemporary period (AlBattat and Som 2013).
Egypt, being a country with centuries old architectures and rich historical background had been one of the most attractive travel and holidaying destinations for a major share of the international tourists from all parts of the world. Over the years, owing to increasing number of inflow of tourists, the tourism and hospitality industry of the country had developed substantially, creating huge employment scopes as well as economic prosperity of the nation. The economic welfare of the residents of the country has also increased considerably, owing to the development of the industries and services with direct and indirect linkages with the tourism industry of the nation (Hanna 2013).
However, in the last decade, especially post 2013, the country has been experiencing huge turmoil in its socio-political scenario owing to the military coup as well as the airline disaster series (which started with the downing of the Metrojet 9268) and the terrorist attacks which are taking place in the country over the last few years, which primarily include the bombing of churches, attacks on Red Sea resort, bus attacks, Arish attack and many more (Topham and Macalister 2018). The crisis being primarily a type of civil crisis, has led to immense negative implications to the overall economy.
All these attacks have not only led to considerable disturbances in the political scenario of the country but has also led to considerably downturn of the economic conditions of the country, by causing many industries, especially the tourism and hospitality industry of the country owing to the significant increase in the level of panic and scepticism among the international tourists, who are increasingly replacing Egypt with other safe holiday destinations.
As is evident from the above figure, the arrival of international tourists in Egypt has decreased substantially over the last few years, with the numbers decreasing by nearly 42% in 2016 from that was in 2015 (Ibrahim 2013). The tensed political situations and threat of life loss have contributed significantly in the rising aversion of the tourists as well as of the foreign flight companies and also because of the suspension of flights in many areas including that of Sharm el-Sheikh, many of which used to be popular tourist destinations. Over one year, from 2015 to 2016, the number of Russian tourists went down by 60%, while that of the British tourists getting decreased by 17.5% and the German tourists getting decreased by 10.4% (Geiger 2018).
This has in its turn resulted a huge decrease in the number of bookings of the hotels and holiday packages as well as in the reduction in the revenue generation from the industry as a whole and from those industries with direct and indirect linkages with that of the tourism related activities in the country. This can be seen from the reduction in the share of the tourism industry in the GDP of the country, which can be seen as follows:
Theoretical and Conceptual Models of Crisis Management
As can be seen from the above figure, the share of the tourism and travel industry in the GDP of the country has decreased substantially owing to the reduction in the revenue generation as well as activities in the concerned industries, which can be attributed to the decreased inflow of tourists in the currently, which in turn has hampered the tourism industry and has led to the creation of a acute crisis situation in the industry.
The effects of the crisis cropping up in the tourist industry has been of such huge extent that the not only the tourism sector has been affected due to this, but the effects have also been seen to trickle down to the overall economy of the country, in terms of the stagnation of the economic growth and also in terms of considerable loss of employment scopes in the country.
The unemployment in the country has increased substantially in the last few years, much of which can be attributed to the loss of jobs in the textile and in the tourism sector of the country.
As discussed in the above section, the civil crisis occurring in the overall economy of Egypt and particularly in its travel and tourism industry, has resulted into the creation of immense concern among the stakeholders in the industry, which include the national as well as the local government of the country, the tourist enterprises and establishments and the investors and financial institutions which are engaged in the various tourism projects. The concerned section of the report tries to analyse the responses (both immediate as well as over the time) of the different stakeholders in the country, to the crisis situations arising in the tourism sector of the country (Harb 2018).
The primary stakeholder in the tourism industry in Egypt, being the government of the country, it becomes one of the primary responsibility of the government of the country to manage the crisis occurring in the tourism sector of the country in the last few years. However, the actions of the government of the country, especially immediately after the initiation of the crisis in the tourism industry of the country are not seen to be substantial (Harb 2018). The primary reason behind the lack of that much responsiveness of the national government of the country, especially immediately after the occurrence of crisis, can be attributed to the political instability and tensions prevailing in the country itself and the repeated attacks which have affected the government infrastructure and operations massively.
The responses of the government of the country, especially the Ministry of Tourism, in terms of crisis management in the industry, is found to be mainly reactive and not proactive, in spite of their robust communication channels with other stakeholders of the industry. There has also been a presence of contingency plan in the hands of the government of the country as can be seen from the various plans which have been formulated by the Crisis Management wing of the Ministry of Tourism of the country. These also include the role of the tourism police as well as the disaster management wing and the national media in combating the crisis occurred. However, the plan is not seen to be widely circulated among the other stakeholders in the industry and the same has been seen to be narrow and selective, which in turn has failed to fit, especially with different types of crisis occurring in the industry, especially in the aspects of the potential crisis.
The Significance of Contingency Planning
Thus, the crisis management process taken by the governing authorities of the country is not seen to be efficient enough in the aspects of predicting and preventing the crisis and building up a robust framework for doing the same. However, the government of the country, in the recent years have been taking some steps to manage and revert the effects of crisis in the tourism industry, which are worth mentioning. These particularly involves the strategy of creation of an overall Sustainable Tourism Strategy (2020), which targets to increase the international arrivals to 25 million and the per capita profit by 30%. For doing the same, the government has created encouragement in investment in these sectors, has liberalized the port services, granted apron handling of the licensed flight companies (Egyptianstreets.com 2018). The government has also provided TDA for increasing the land supply for hotel development. The Ministry of Tourism has also launched different types of tourism like sports tourism, shopping, residential, health as well as therapeutic tourism, in order to promote the industry of the country in front of global tourists, thereby trying to reverse the impacts of crisis which has occurred to the industry in the last few years. The Ministry has also been approaching the European, Russian and African countries to assure them about the security of their citizens as tourists in Egypt, which has also proved to be beneficial to a considerable extent (Boukas and Ziakas 2014).
One of the worst and direct hits of the crisis arising in the tourism sector of the country has been the tourist establishments and enterprises, which have suffered a huge decrease in their revenue and employment generation. The tourist enterprises have reduced their package prices, with the support of the government to make the destinations attractive to the international customers, especially of the developing and emerging countries like India. The enterprises are also tying up with one another and with various airlines and hotel industries to make the packages comprehensive and providing the potential tourists an authentic Egyptian experience at one go and in affordable prices (Aktas and Gunlu 2012).
One of the primary advantages of most of the holiday and tourist destinations of the country is that they are usually distant from the centres of disturbances and terrorism. In spite of that, these destinations are strengthening up their security services and customer protection infrastructures to ensure the tourists that they are safe. The airlines like Egypt Air and others are also trying to address the crisis situation by providing attractive fare packages to the customers, both domestic as well as international (Al Shobaki, Amun and Naser 2016). The enterprises, together with the government are also providing discounts for the government employee and youths of the country itself to encourage them to travel and have holiday experiences in the country.
However, most of the tourist enterprises and travel agencies do not have robust knowledge about crisis management and limit their crisis management mechanism in addressing the situations when crisis actually occurs, through a primarily defensive strategy and most of them resort to price cut strategies as a coping instrument in these aspects.
The Role of Spokespersons in Managing Crises
Although the initial phase of terror attacks and turmoil in the political scenario of Egypt saw a considerable withdrawal of investment from the tourism and hospitality sector, in the current period, mostly because of the attractive incentives and offers provided by the government, the tourism industry is seeing some increase in the investment flow in these sectors. However, most of these investments, especially the private ones, are congested primarily in those areas which appear to be safer in the perceptions of the international travellers. The scepticism is still not gone totally.
The media played a considerable role, both in positive and negative sense, in responding to the crisis situation in the tourism sector of the country. Considerable discrepancies were also seen to be observed in the public as well as international media, regarding the extent and magnitude of the incidents happening in the tourism sector (Baker 2014). While the national media tries to keep in check the panic arising among people regarding the incidents, the international media displayed the extent and intensity of these incidents, thereby creating huge fear and tensions among people across the globe and the country, which in turn has affected the tourism sector of the country adversely. Its only in the recent years that the fear of the travellers across the world is seen to be gradually decreasing, thereby helping the tourism sector to some extent (Neuhofer, Buhalis and Ladkin 2014).
One of the primary lessons learnt from the inefficient and less than sufficient crisis management as well as from the slow revival of the tourism sector of the country is that in absence of a proper crisis management sector in the country, equipped with attributes like ability to foresee potential dangers, efficiency in developing measures to avert the dangers, in case of occurrence of any crisis the ability to react promptly and appropriately and the ability to restore the stability in the sectors, the management of crisis situations become difficult. Also, to manage crisis, a proper network among the different stakeholders and communication channels with the service providers and the government authorities need to be present.
As much of the negative effects of such incidents which have been observed to be occurring in the tourism sector of Egypt, are on the reputation of the industry as a whole and the same leads to the increase in the level of panic among the potential customers, it is of utmost importance to maintain stability and proper dissemination of information of authentic information without distorting the same and it is also important to ensure that the steps taken to address the issues are also brought forward in front of the public. Implementing these changes and monitoring of the overall crisis management framework can thus help in averting as well as addressing the crisis arising in the future efficiently.
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