The following literature review will be broken down into two sections; first, theoretical frameworks that underpin the research topic, namely Crisis Management in tourism and Place Marketing; and second, focussing on the South African tourism industry, leading to a discussion on Cape Town’s tourism and the 2018 water shortage crisis it faces. By undertaking this review, research questions will be presented at the end.
Noteworthy, as the phenomenon under investigation impacts on tourism businesses, the following review not only focuses on academic literature, but also encompasses policy and practice material. Therefore, reference is made to the research conducted by various industry bodies, such as the UNWTO and the WTTC. However, the review is heavy reliant on the ‘Standing Committee for Economic and Commercial Cooperation of the Organization of Islamic Cooperation’ (COMCEC). The report produced by COMCEC provides insightful information into the actions taken by various countries regarding crisis management in tourism, thereby supporting the academic literature thereof.
1.1 Introduction: Theories of Crisis and crisis management
According to Faulkner (2001) the plethora of media to which we are exposed daily inform us that we are currently living in a world that is susceptible to increasing disaster. The author argues that “tourism destinations in every corner of the globe face the virtual certainty of experiencing a disaster of one form or another at some point in their history.”
In light of the recent array of crises affecting the tourism and hospitality industry, Crisis Management has moved to the forefront of tourism literature. The spectrum of crises currently impacting on the industry, as per Pforr (2006), ranges from health-related risks such as the outbreak of foot and mouth disease in Britain in 2001 and bird flu in South East Asia in 2003, terrorism attacks in the USA in 2001 and London in 2005, as well as natural disasters such as the earthquake that struck Taiwan in 1999, the killer tsunami of 2004 that swept the coastlines of India, Thailand and Sri Lanka, bush fires in Australia in 2002 and hurricane Katrina that demolished many tourist destinations in the USA in 2005. However, the UNWTO (2011) has introduced an updated spectrum of crises events in tourism listed in Table 1.
- (1) Environmental Extreme weather and anthropogenic circumstances (deforestation, climate change)
- (2) Societal and political Terrorism, riots and series of crime
- (3) Health related Disease outbreaks (concerning humans and animals)
- (4) Technological System breakdowns and failures and transportation collisions
- (5) Economic Financial crises and currency instabilities
Table 1: Categories of crises events created by the author; based on COMCEC (2017).
These dreadful events are affecting the tourism industry’s routine operations as it has brought about a change in tourist behaviour, suggesting that the increase in perceived risk of destinations is gravely impacting on tourist mobility (Floyed et al., 2004). Similarly, Hall et al. (2004) argues that tourist behaviour and, therefore, destinations, are greatly influenced by changing perceptions of security, safety and risk.
The tourism industry, according to Pforr (2006), appears to be extremely vulnerable to negative events as it is under constant threat with crises events perpetually looming and occurring in various parts of the world. McKercher & Hui (2004) described crises as unavoidable “episodic events that disrupt the tourism and hospitality industry on a regular basis”, and Coles (2004) expanded on this by stating that destinations which are not in crises at a specific point in time is essentially in the ‘pre-event-limbo’ stage just waiting for the negative event to transpire.
Pforr (2006) is of the opinion that the tourism industry has experienced major growth over the past 50 years due to the upsurge of technological innovations and development of transportations. The strengthened interconnectedness of the world signifies that any crises event will have a greater negative impact on a wider population than in the past. Interestingly, eleven years later, Pforr’s (2006) confident claim is upheld by the WTTC (2017), who asserts that travel and tourism has outpaced the global economy for the past six years, because of travellers’ keenness to explore new places in the face of political and economic volatility, along with the increased rate of globalisation, thereby exhibiting the industry’s resilience.
Discourse in the academic literature around crises management primarily focuses on answering long overdue questions such as; How can businesses prepare for crises events? How do tourism businesses react to these events? Which strategies could be employed to overcome crises situations, and, what exactly constitutes a crisis? However, according to Faulkner (2001), there is little methodical research done on disaster phenomena within the tourism and hospitality industry, which is rather surprising, as such studies are crucial to relevant authorities and stakeholders to develop and improve strategies for avoiding and overcoming crises events in the future, in addition to learning from past experiences. The author concludes by stating that there is a significant lack in the literature on the impacts of and responses to crises events within the industry at large. This is confirmed by Pforr (2009), who states that academic literature has indeed shown an increased focus on crisis management in tourism, however, remaining a highly ‘under-researched’ phenomenon compared to universal studies on organisational crisis management.
In support of the above, the publications on crisis management in tourism are few and far between, which according to Ritchie (2004), is partly the case due to the complex and unstable nature of crises events as well as the incapability of researchers to comprehend such occurrences. The author continues by stating that the existing body of research provides no clear definition of ‘crisis management’ nor a distinction between ‘crises’ and ‘disaster’. Several authors interpret and describe these terms differently and utilise them in various contexts. For example, Santana (2004) maintains that “the literature provides no generally accepted definition of crises and attempts to categorize types or forms of crises have been sparse.” It is therefore necessary to be rather particular with the semantics pertaining to the topic. The following section will provide an array of definitions on crises, disaster and crisis management before continuing.
Author Definitions of ‘Crises’
- Selbst (1978) Any action or failure to act that interferes with an organisation’s ongoing functions, the acceptable attainment of its objectives, its viability or survival, […].
- Booth (1993) A situation faced by an individual, group or organization, which they are unable to cope with by the use of normal routine procedures and in which stress is created by sudden change.
- Faulkner (2001) Crisis is a situation where the root cause of an event is [….] self-inflicted through [….] inept management structures and practices or a failure to adapt to change.
- Ritchie (2004) Crises are indefinite, numerous, unexpected and unpredictable.
- Laws & Prideaux (2005) Crisis is an event, […], that creates a shock to the tourism industry resulting in the sudden emergence of an adverse situation.
Table x: Definitions of crises; created by the author.
Author Definition of ‘Disaster’
- Clark (1995) A disaster is any unplanned event that can cause death or significant injuries to employees, customers, or the public; shut down the business; disrupt operations; cause physical or environmental damage; or threaten the facility’s financial standing or public image.
- Faulkner (2001) A situation where an enterprise [….] is confronted with sudden unpredictable catastrophic changes over which it has little control.
- McKercher and Hui (2004) Disasters are either “natural events [….] or human induced events [….].”
Table x: Definitions of disaster; created by the author.
Author Definition of ‘Crisis Management’
- Santana (2004) An ongoing integrated and comprehensive effort that organizations effectively put into place [….] to [….] understand and prevent crisis, […] manage those that occur, taking into account […], the interest of their stakeholders.
- UNWTO (2011) Strategies, processes and measures which are planned and put into force to prevent and cope with crises.
- COMCEC (2017) Aims to reduce the chances of a crisis occurring, mitigate the impacts […], and recover […] essential structures and functions quickly.
Table x: Definitions of crisis management; created by the author.
From the above definitions, it might be logical to conclude that crises can be defined as events that are progressive, predictable, initiated by anthropogenic action, and of longer duration that a community (individual, group and organisation) faces and responds to by taking exceptional measures. However, in the reviewed literature, terms such as ‘catastrophe’, ‘disaster’, ‘problem’, ‘turning point’ and ‘negative event’ are all frequently used correspondingly.
The following part discusses the effects that crises have on different societies and economies.
Impacts of Crises in Tourism
The most undesirable effect that crises have on tourism is the rapid decrease of tourist arrivals to a destination. As per COMCEC (2017) plummeting occupancy levels have distressing consequences for many tourism businesses including hotels, conference centres, tour operators, airlines and sporting events. According to COMCEC (2017) there are five principal reasons for declining tourist arrivals during and after a crisis event, namely (1) material damage to public services and infrastructure, (2) loss of consumer confidence in the destination and reinforced perception of risk, particularly in terrorism related instances, (3) decisions made by travellers to reschedule or cancel their excursions, (4) the removal of holiday packages of destinations in distress from tour operators brochures, and (5) reduced flights by airlines to afflicted destinations. These problems will undoubtedly lead to an increase in unemployment, thereby failing to sustain economic growth for individuals and businesses within the industry, resulting in a shortfall of tax revenues for government, and lack of investment in services from entrepreneurs (Laws & Prideaux, 2005).
Many unsettling events only occur in a small geographical area of a destination, but, unfortunately, the whole country may be affected by a negative image. However, it could be possible that some outlying and/or rural areas might just benefit from increased publicity, albeit negative. If suitable and appropriate corrective tactics are employed, the effect and impact of the negative event will be relatively short-lived. However, if the destination is still perceived as dangerous once remedial actions have been undertaken, the recovery phase might take longer and is likely to become stagnant (COMCEC, 2017).
The COMCEC committee refers to Misrahi (2016) who notes that flight demand, after the 9/11 terrorist attack on New York, plummeted by 30% throughout the initial aftershock and aftereffects of the event, and it took hotels in the city a period of approximately 34 months to recuperate from the terrifying crisis. Notably, crisis events will impact differently on various tourists. For example, the 2008 financial crisis had a major effect on both leisure and business travellers universally, however, business tourism experienced the crisis more severely due to the deceleration in global business activity (COMCEC, 2017).
The following section focuses on literature around crisis management strategies employed within the tourism industry.
Crisis Management: Strategies and Actions
From the above it’s evident that crisis management in tourism has become a timely topic. There is high demand amongst authorities and stakeholders within the tourism and hospitality industry for valuable and effective crisis management strategies. Ritchie et al. (2004) and Coombs (1999) stated that crisis management strategies have to be tailored to each individual crisis event and positioned in accordance with the historic, socio-cultural, political, economic and physical environment of the destination. Effective communication and cooperation amongst all relevant stakeholders are vital for the creation and implementation of tailored responses.
Faulkner (2001) reasons that the implementation of a crisis management strategy could mitigate the impacts of, and, even completely, avoid some crisis situations. Furthermore, he argues that the creation of a predetermined plan will reduce the likelihood of panic and stress during the recovery stage, leading to a more effective and well-organised response. As per the author, tourism destinations are more or less susceptible to specific crisis events than others; therefore, steps need to be taken in order to evaluate a destination’s exposure to certain risks and develop plans accordingly.
Faulkner (2001) proposes a strategic, proactive ‘Crisis Management Framework’ that is based on the research of several different authors, including Turner (1994), Quarantelli (1984), Cassedy (1991) and Drabek (1995). The framework encompasses six stages, namely (1) pre-event, (2) prodromal (limbo stage), (3) emergency, (4) intermediate, (5) long-term, and (6) resolution. The following figure illustrates a brief outline of the six stages.
Figure 1: Tourism Crisis Management Framework; taken from Faulkner (2001).
Faulkner’s research, debatably, remains the foundational work upon which subsequent research has been conducted, owing to its significant contribution to the study and comprehension of crisis management within the tourism industry.
Accordingly, Faulkner’s framework has been broadly applied to many ensuing studies in this field and is often tried and tested by other noteworthy researchers by means of empirical case studies. For example, Miller and Ritchie’s (2003) depiction of the 2001 foot and mouth disease outbreak in the UK, and Henderson’s (2003) interpretation of the 2002 Bali terrorist attack.
Falkner’s framework illustrates how the tourism industry can cope successfully with a crisis in accordance with the progression thereof, nonetheless, the framework has one vital limitation. Faulkner neglects to incorporate operational level responses to crises and merely focuses on strategic level responses from national, provincial and city governments. Hence, the actions initiated among tourism businesses are overlooked. For this reason, Faulkner’s conceptual framework is used the guide the analysis of this study, which includes a discussion on actions taken at both strategic and operational levels within Cape Town’s tourism industry.
The following section will examine key actions taken by destinations who have found themselves in various stages of Faulkner’s (2001) framework, with reference made to real life cases of tourism crisis.
According to COMCEC (2017) further efforts need to be made by relevant destination authorities and organizations within the tourism sector to win back trade after being negatively affected by an incident. The most essential actions taken, due to their success and effectivity, are;
Strategies / Destinations
Government leadership and commitment – providing grants and reduced costs and taxes – Indonesia
Macedonia
Familiarisation trips and increased marketing efforts – Nepal
Kenya
Image restoration Australia
USA – city of New Orleans
Market and product diversification Indonesia
Maldives
Egypt
South Korea
Promotion of domestic tourism Brazil
Spain
China
Table x: Strategies employed by destinations to cope with crises; created by the author.
By providing support and exhibiting confidence within the industry, Government can help tourism organizations recuperate from economic slowdown through various ways, such as increased security measures and reconstructing tourism infrastructure to name a few. Putra and Hitchcock (2006) commented on the actions taken by the then Indonesian President, who relocated the parliamentary meetings from the country’s capital, Jakarta, to Bali after the 2002 bombing; thereby, affording financial support to conference centres. Furthermore, governments can improve a destination’s competitiveness by reducing the costs that have been transferred to the tourism industry, and, consequently, tourists. For example, by implementing a more supportive and suitable fiscal policy, which involves relinquishing visa fees, lowering bed-taxes and offering reduced interest rates on loans, tourism businesses will be able to cut unnecessary costs. The World Economic Forum (2015) draws on the example set by the Macedonian Government, whereby funding was tendered to airlines who were prepared to introduce flights to more cities within the country. The Government paid airlines €40,000 for each destination added, and an extra €9 for every ticket bought.
As per COMCEC (2017) familiarisation trips are directed at influential public figures and media personnel from the source market(s), along with major travel trade producers in order to persuade them to promote and support the destination through their programs. These trips are intended to illustrate that the recovery process is well underway and progressing as the destination continues to offer safe, pleasant and satisfying visitor experiences. Reiterating the example of Nepal, the tourism board’s all-rounded strategy included a social media campaign, as well as familiarisation trips for selected tour operators, media personnel, well-known celebrities such as international actress Susan Sarandon, in addition to key opinion leaders. Comparably, Kenya exemplified the benefits gained from increased promotional efforts when the tourism sector combatted the impacts of political instability and terrorist attacks by multiplying its marketing budget in 2015/16, simplifying visa regulations for its substantial South African market and offering incentives for packaged travel programs. Accordingly, the Aviation, Travel & Conservation News (2017) confirmed that Kenya’s tourism industry experienced a 16% recovery rate in 2016.
As stated by COMCEC (2017) image rebuilding is an essential part of the recovery period as it enables the destination to reposition itself within the consumers’ minds and address any negative market perceptions. Primarily, potential visitors are drawn to a destination through positive WoM marketing and media advertisements; thus, news reports concerning disruption within the industry could establish anxiety for and apprehension towards a destination’s leisurely activities and business endeavours. For this reason, marketing messages should attempt to rebuild trust amongst prospective visitors by means of published, and hopefully optimistic, articles written by journalists after familiarisation trips, together with webcams placed in attractive locations to display, in real time, the safety and appeal of the area. Walters and Mair (2012) conducted research on the marketing messages implemented in Australia’s Gippsland region after it suffered a severe loss with the 2009 bush fires. The authors found that the messages encompassed a variety of themes and tactics which allowed the area to revitalise its tourism; these included celebrity endorsement, visitor testimonials and recommendations, promotional offers such as reduced prices, events and festivals, re-establishing confidence and creating curiosity, along with ‘open and ready for business’ announcements. From their research, Walters and Mair (2012) learned that celebrity endorsement was the most effective tactic employed, with discounts and ‘open for business’ messages being the least efficient. Another constructive example of successful image and credibility restoration is presented by Chacko and Marcell (2008) who stated that the USA city of New Orleans restored its image by forming the New Orleans Media Centre, which solely focussed on media exposure of unharmed and safe areas of the city after Hurricane Katrina in 2005. Popular campaign catchphrases included ‘Come fall in love with New Orleans all over again’ and ‘New Orleans, just as you remember it’.
Moreover, market and product diversification seem to be a preferred strategy to many destinations which have experienced crisis. According to Fallon (2008), also Hitchcock and Putra (2008), Bali’s tourism benefitted from approaching and appealing to other markets such as Russia, Middle East and East Asia, when Western markets enforced travel warnings and alerts on Indonesia after the 2002 bombings. Comparably, Carlsen and Hughes (2008) reported that the tourism board of the Maldives allocated roughly US$ 1.5 million to marketing initiatives which was designed to attract tourists from diversified and emerging markets such as China and Russia after the 2004 tsunami. Furthermore, consistent with the World Economic Forum (2015) and Egypt Today (2017), Egypt’s decision to introduce a direct flight from Cairo to New Delhi, as well as providing Indian travellers with visas on arrival saw visitor numbers increase by 30% in 2017. South Korea, on the other hand, decided to diversify its product offering when it targeted the Malaysian market in 2010 with its medical and shopping tourism after established markets were discouraged and advised against the destination as a consequence of the longstanding conflict with North Korea.
By promoting domestic tourism local businesses can continue their operations despite economic slowdown, and subsequently, absence of international visitors. This strategy is most beneficial due to the fact that locals are more aware and accurately informed on the real situation within the country. However, this tactic should be employed as a long-term approach to prolonged crisis. It was reported that many countries, for example Brazil, Spain and China offset the plunge in international visitor arrivals by encouraging national tourism after the 2008/9 global financial crisis. (UNWTO, 2017)
One strategy that cannot be overlooked by any one destination is a crisis communications plan. This plan should be developed prior to a crisis and establish the human and financial resources available for exploitation. Crisis communications enable the relevant authorities to provide visitors with timely, accurate and credible information and allows them to take well planned and appropriate action in advance to the event. A communications policy should incorporate a key spokesperson that is responsible for the management of information during any public relations activities, for answering internal questions, as well as have authority over the initiation and monitoring of the communications plan. The appointment of a centralised organisation and/or individual ensures that the dissemination of mixed messages and, therefore, a public relations catastrophe will be avoided. Further fundamental strategies include, but are not limited to, social media campaigns, special offers and the introduction of new products. (COMCEC, 2017)
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