6 Jun, 2003

Travel Industry Trapped In A Sickness-A-Year Syndrome

Imtiaz Muqbil

With Iraq behind us, and SARS fading, a Travel Impact Newswire essay looks at ways for the travel & tourism industry to look ahead and start treating itself the same many of its customers are demanding: holistically.

In this dispatch:

1. TRAPPED IN A SICKNESS-A-YEAR SYNDROME: With Iraq behind us, and SARS fading, a Travel Impact Newswire essay looks at ways for the travel & tourism industry to look ahead and start treating itself the same many of its customers are demanding: holistically.

2. BANK FUNDING GRANTS FOR POVERTY-REDUCTION PROJECTS: The Asian Development Bank is funding projects for poverty alleviation. If you know of any serious and dedicated travel & tourism non-governmental organisations who could be eligible for these grants, please forward this news item to them.

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1. TRAPPED IN A SICKNESS-A-YEAR SYNDROME

Over the next few weeks, the Asia-Pacific travel & tourism industry will be in full bounce-back mode. According to preliminary figures compiled by the Pacific Asia Travel Association (PATA), the following budgets had been allocated for recovery campaigns alone: Singapore Tourist Board S$ 200 million (about US$ 116 million), Tourism Authority of Thailand 500 million baht (about US$ 12 million), Malaysia nearly 900 million ringgit (about US$ 237 million) and Australia A$3.1 million (about US$ 2.06 million).

As these REcovery campaigns roll out (a comprehensive list is to appear in PATA’s Issues & Trends, July 2003 edition), arrivals begin to pick up and pent-up travel demand is REleased, the industry will soon be able to once again thump its chest and crow about how REsilient it is.

But a number of issues have emerged that REquire the industry to fundamentally RE-examine the way it does business. This will involve RE-visiting many of the old theories and conventional wisdoms and then RE-structuring, RE-engineering, RE-inventing and RE-positioning itself for the future.

This will involve moving beyond fire-fighting towards fire-prevention. As Mr John Morse, former Managing Director of the Australian Tourist Commission, said in a keynote speech at the PATA Mekong Tourism Forum last April, “The industry needs to start asking itself: What went wrong?”

If travel & tourism was a medical patient, it would be classified as being chronically sick. Somewhere along the way, it needs to pause and REview all the factors contributing to this spate of sicknesses and decide how it can REgain a healthy, holistic and sustainable lifestyle? How can it wean itself away from popping pills and learn from one of the most significant trends in the industry itself: The growing demand for holistic solutions that focus on PREvention, not cure.

This brief essay outlines some thoughts. As Tom Nutley, Managing Director of Reed Travel Exhibitions, said in a recent interview: “I am under no illusions that anything will come of it, but at least I will be on the record for having tried.”

INTRODUCTION

This was the seventh multi-country crisis to affect travel & tourism, each in a different sector of the post-cold war, interdependent economy. First, came the haze which blanketed many parts of Southeast Asia in 1997-98. Alongside that, Asia was hit by the currency and economic crisis of 1997. Just as it recovered, the euphoria of a new Millennium was dented by the Y2K bug. Then came Sept 11, 2001 and Afghanistan 2002. In just the first half of 2003 alone, we have had a conflict in Iraq and SARS.

That works out to about a crisis a year. Each crisis can be divided into the following categories: technology, environment, politics, economics and health. In all, travel & tourism has been one of the primary, if not always The Primary, victim.

There have been others (like AIDS, Mad Cow Disease, and Gulf War I, smaller regional crises like cross-border tensions, civil wars, political changes, separatist issues, crime). While other short-term local and regional crises cannot be forecast, some global issues already on the horizon include the global water crisis, the backlash against globalisation and the growing rich-poor gap.

All have exposed the industry’s soft underbelly, especially its vulnerability to external factors over which it seemingly has no control. A globalised world means globalised threats. Today, travel & tourism can be hit by the direction in which the wind blows (the haze), a computer bug (Y2K), a biological bug (SARS), people with a cause (terrorism), unscrupulous currency speculators (the Asian economic crisis) and short-sighted politicians (the war in Iraq).

On the positive side, these crises have underscored industry unity. A common threat helps people quickly circle the wagons and join the fight for survival. Like any family, travel & tourism may be split internally, but when the threat is real and immediate, the industry’s rapid-response strategies are perhaps the best there is.

One outcome clearly has been an underscoring of the industry’s importance. Because travel & tourism became the first victim of these crises, governments have now become even more aware of the need to help it survive. Governments knew well the industry’s foreign exchange earnings and job creation capabilities, but the wake-up alarm rings even louder when the scale of job and income losses begins to appear more staggering than job and income creation. Indeed, the industry is learning that the higher you go, the harder you fall, especially when there is no safety net beneath.

THE RESPONSE (SHORT TERM)

PRICE CUTTING: This short-term fix has become standard operating procedure. What the major industry association chiefs constantly refer to as the ‘resilience’ of the travel & tourism industry is code for massive price-dumping which invariably follows every crisis. This is in full swing and will certainly tempt consumers to part with their money while the limited-time deals last. But yields will plunge and take time to recover. The strengthening of the dollar will further complicate things. At the same time, much will depend on how high travel now stands as a priority in terms of discretionary spending: in the old days when everyone was making money hand over fist, travel was high on the list of things to spend on. Today, that has changed.

REJIGGING OF MARKETING BUDGETS: Having dropped prices, the industry has moved to rejig marketing budgets and plans. The search is on for new markets, especially domestic and regional, and reduced dependence on long haul markets. Thinking local is more trendy than global. This was long overdue. China, once shaping up as a major inbound/outbound market, is in limbo until it can get the SARS issue sorted out.

HELP FOR SMALL AND MEDIUM SIZED ENTERPRISES: Travel & tourism has traditionally focussed on the big guys. This time, governments realised that when times turn bad, the small guys get worst hit. When the crisis is over, will the industry go back to the old habits and cater to the big boys or will it maintain equally vigorous support for the small guys? As smaller companies clearly are more vulnerable, regional travel & tourism trade associations need to ensure that the tax breaks and survival support are maintained, perhaps with some adaptation. Governments have spent too much time wooing cash-rich ‘foreign investors’ and inadequate attention to their own smaller constituents. If the onslaught of globalisation is to be truly balanced, this needs to change, and small companies have a unique opportunity to press home this point.

THE TRIUMPH OF ASIAN TRAVEL ASSOCIATIONS: Before the war in Iraq began, the ASEAN Tourism Association (ASEANTA) was the first and the only industry association to publicly oppose it, albeit mildly. At least it tried. The Association’s board made the statement after a meeting in Phnom Penh, capital of the country that experienced the 20th century’s last genocidal holocaust. It was headed at the time by a Cambodian acutely aware of his country’s history. At its annual conference in Bali in April 2003, the Pacific Asia Travel Association scored another first, putting three ambassadors from travel advisory-issuing countries on a panel at which they were rigorously grilled about who issues these advisories, how and why. Other travel associations and groupings — which claim to represent the world but in fact are dominated by members of the Atlantic countries — have done nothing even remotely comparable.

THE RESPONSE (LONG TERM) NEW PARTNERSHIPS: The one area in which the industry is horrendously lax is developing partnerships with civil society, non-governmental organisations, global peace movements and alternative media who share its values. These movements play a major check-and-balance role in helping stave off internal and external excesses and boosting exposure to an alternative view that the industry has not paid enough attention to.

Those protesting against the G-8 countries and their free-market policies are not stupid. Temporarily disorganised and leaderless, perhaps, but certainly not stupid. Many Hollywood entertainers played a significant role in trying to avert the war in Iraq. Some of their views can gel well with those of the travel & tourism industry. These people, brave enough to express opinions that the travel & tourism industry avoids, need to be supported in every way possible.

BALANCING AND MANAGING GLOBALISATION: Countries need to protect themselves just as much against viruses and terrorists as they do against the speculators and corporate predators. Open markets, like open borders, have their advantages, but they can also allow ill-motivated individuals in distant capitals to hold entire countries hostage. This entire philosophy of unbridled open markets, so passionately championed by WTTC, needs to be closely questioned in order to attain greater balance and protection against external threats. When danger strikes, the weakest get most affected. A vulnerable industry that collapses with a mere pin-prick has no potential for long-term growth.

TACKLE THE CAUSE, NOT SYMPTOMS: Next week, yet another talkshop on “crisis management” will be held in Manila, this time organised by the World Tourism Organisation. It plans to discuss ways to “anticipate and counter crises in the tourism industry” and to help countries “to be ready at all times to meet any contingencies and to respond to unforeseen crises situations as expeditiously and as effectively as possible.” Like its many predecessors, the meeting will achieve nothing until delegates seriously differentiate between dealing with the symptoms and the cause.

A NEW DEFINITION FOR ‘NEW PARADIGM’. On the International Air Transport Association website, Director General Giovanni Bisignani says the airline industry needs to think outside the box. But there is no evidence that IATA is thinking outside the box of its own trade and industrial interests. If today the threats are coming from environmental, technological, health, political and economic factors, IATA has done much to sort out the first three but claims inability to address the remaining two. Why? As long it continues to think that nothing can be done, nothing will be done.

As former governor of the Tourism Authority of Thailand Pradech Phayakvichien told a WTO Recovery Committee in London in November 2002, “If we don’t try to seek ways to influence events, we will be influenced by them.”

CONCLUSION

Any crisis created by man can be tackled by man, as long as the will exists. As these latest crises have proved, money suddenly becomes available, investment privileges and tax-cuts that were once an anathema suddenly fall into place. Indeed, the POLITICAL WILL to take painful decisions suddenly seems to materialise. If it could be applied to preventing SARS, the same can be done for anything from WARS and conflict to economic issues. Travel & tourism is very good at short-term fixes. An equivalent amount of time, money and energy needs to be directed in the search for long-term solutions so that talk of sustainability and leaving a safe and environmentally friendly world for future generations does not look like mere hollow talk.

Asia-Pacific travel associations can and should take a lead in this. Individual think-tanks can also be set up in various destinations to come up with truly innovative and holistic solutions to help wean the industry away from popping pills to overcome this sickness-a-year syndrome in which the industry is currently trapped.

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2. BANK FUNDING GRANTS FOR POVERTY-REDUCTION PROJECTS

The Manila-based Asian Development Bank has approved a US$500,000 regional technical assistance grant to help non-government organisations (NGOs) design and implement innovative projects. It is a unique opportunity for NGOs in the travel & tourism industry to access funding for projects to stress poverty reduction and enhanced cooperation between them, the ADB and governments.

According to a Bank Press release, the NGO Partnerships for Poverty Reduction project will provide NGOs with access to ADB funds, an objective identified in ADB’s Medium-term Strategy. It also fulfills a recommendation of the framework for ADB-Government-NGO cooperation, recently adopted after extensive public consultations with a range of stakeholders.

“This is a landmark development in ADB relations with civil society,” says Jan P.M. van Heeswijk, Director General of ADB’s Regional and Sustainable Development Department. “The regional technical assistance gives ADB greater flexibility and additional resources to support innovative NGO activities that complement our poverty reduction efforts at the country level.”

To be eligible for funding, an NGO must meet certain criteria, including: 1) Operating in an ADB developing member country; 2) Being a nonprofit organization; 3) Maintaining a proper accounting and financial system; and 4) Having a track record in implementing small innovative projects.

NGOs may submit proposals up to US$50,000 per country, or up to $20,000 per project. ADB’s NGO Center will manage implementation. Resident Missions will solicit proposals from NGOs. Proposals should fit in with ADB’s Country Strategy and Program and national poverty reduction efforts as well as strengthen linkages between ADB, governments and NGOs, or build NGO institutional capacity to respond to the needs of poor people.

Proposals also should feature co-financing or in-kind contributions by the participating NGO. “Increased NGO involvement will increase the effectiveness, sustainability, and quality of our services to developing member countries,” said Mr. van Heeswijk. The regional technical assistance comes from ADB’s Poverty Reduction Cooperation Fund, financed by the United Kingdom.

For further information, pls contact: Ian Gill, igill@adb.org, Tel:+ 632 632 5890; +632 833 1156

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