Tourism: risk and recovery

Pirates, tsunamis, volcanoes and terrorist attacks are just some business risks facing the modern travel agent. But spare a thought for the airlines, adventure tours, hoteliers and service industries relying on travellers for business. And don’t forget the diplomats and foreign affairs officials at the ready to rescue travellers in distress and return them home to safety.

It’s a complex market, dealing with multiple interests across hundreds of countries, language groups, legislations, currency exchange rates and cultural expectations.

In July 2010, UTS Business hosted a conference on Risk and Recovery Strategies for Tourism Destinations and Businesses. The goal of the afternoon was to provide tourism destinations and operators with risk management strategies to help them protect their reputation, marketability and viability in the face of disaster.

Dr David Beirman, Senior Lecturer in Tourism at UTS was instrumental in bringing Australia’s top tourism industry players to UTS. ‘Risk and recovery is an all of business concern. The issue is about being prepared,’ he explains. Beirman is incorporating risk into the subjects he teaches at both undergraduate and post-graduate levels and plans to increase the University’s focus on mitigating business risk.

Adequate insurance is, of course, a key element to surviving any unexpected impact on business activity, and keynote speaker for the afternoon was Karl Sullivan, General Manager Policy, Risk and Disaster at the Insurance Council of Australia.

According to Sullivan, the lack of insurance is a very significant risk to a business’ ongoing viability in the face of disaster: ‘Our figures show that for SMEs, which I put most tourism operators in, only 74% of those actually insure. Twenty six percent don’t insure their operations or their assets properly. Insurance products like business interruption or local catastrophe insurance for flood, fire or storms, exist, but are not capitalised on enough.’

Extreme weather events are what drives a lot of loss in Australia. ‘Nineteen out of the last twenty natural disasters in Australia have been extreme weather,’ he explained. ‘A lot of the risk comes down to the natural environment and how it impacts on the destination you’re selling to.’

Greg Moriarty, first assistant secretary, consular, public diplomacy and public affairs division, Department of Foreign Affairs and Trade talked about how government works with both industry and with the travelling public to try and ensure that travellers can make informed travel choices.

‘Australians are keen travellers and the cost of international travel has dropped relative to other expenses. Also, our ageing population of people with dual citizenship, means more Australians are returning to their countries of origin for extended visits. ‘

In the 2008/’09 calendar year, DFAT responded to 27,000 cases of Australians in distress.

‘We encourage Australians to register with us; read the travel advice; and take out travel insurance, to minimise the difficulties that unfortunately some Australians find themselves in when they travel overseas.’

But how can industry prepare for events like the eruption of Iceland’s Eyjafjallajokull volcano that stopped European air traffic for a week in April this year? Or the 2004 Boxing Day tsunami that killed close to 300,000 people, leaving devastation and years of recovery in its wake.

‘Bad times demand good ideas,’ says General Manager, Pacific Region, Pacific Asia Travel Association (PATA), Chris Flynn.

Flynn was a key designer of PATA’s recovery plan for the tourism industry, Project Phoenix, that helped build traveller confidence in Asia as a travel destination post SARS, which was accompanied by 6.5 million job losses and huge falls in airline stocks.

‘Once people have it in their minds not to go somewhere, it’s hard to convince them,’ he says. ‘Thailand had nine cases of SARS, but lost two million tourists in 2003.’

He said coordinated industry communication, being upfront and honest about risks and dangers is essential. He was keen to stress how interdependent tourism and local economies can be in developing countries like Samoa, Indonesia and Thailand, and the importance of government roles in funding, planning and delivering recovery plans for the tourism industry post any crisis.

Flynn was closely engaged with the recovery of the Asia Pacific tourism industry after the 2004 tsunami and is now developing a recovery strategy for Samoa since a devastating tsunami hit its shores earlier this year.

General Manager, Tourism Industry Council of NSW, and former Managing Director of Tourism Australia, Geoff Buckley, said risk mitigation strategies and compliance are critical parts of good business.

He explained the Australian tourism sector successfully switched it’s marketing strategy from a high value approach to a high volume approach, to protect from the global financial crisis.

‘Risk mitigation has to be carried out in a way that improves management of an organisation to deliver consistent outcomes and continue to allow for innovation.’ He said.

The event was well attended, with delegates from across New South Wales, and representing diverse sectors of the tourism industry – including wholesalers, agents and operators, as well as tourism students from UTS and other university and TAFE courses. Dr Beirman is hoping to repeat the event next year.

Gabby Greyem