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Strategies for Tourism Industry Under the Global Economic Crisis

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Strategies for Tourism Industry Under the Global Economic Crisis 382 INTERNATIONAL CONFERENCE ON EURASIAN ECONOMIES 2011 Strategies for Tourism Industry under the Global Economic Crisis: A Swot Analysis of Turkish Tourism Orhan Akova (Istanbul University, Turkey) Mehmet Sarıışık (Sakarya University, Turkey) Dilek Dönmez (Çanakkale 18 Mart University, Turkey) Abstract This paper outlines the relations between the global economic crisis around the world and tourism and analyzes related strategies of Turkish tourism against them by conducting a qualitative view. It notes the growing importance of economic crisis for the tourism industry and its affects on Turkish tourism. The paper also tries to point out important strategies for Turkish tourism related to global economic crisis-especially the one that affected the whole world in the 2008 the global financial crisis will be held. Turkish tourism has not been affected as much as its competitors as global economic crisis affected during the last crisis term. While in most countries around the world tourist arrivals have been declined, Turkey has received a higher rate in tourist arrivals since the global economic crisis started. Although tourist arrivals have been arose, the tourism revenues have been declined in the year of 2009 and 2010 according to previous years. In this paper it is going to be analyzed the conditions and related strategies of Turkish tourism against global economic crisis. In order to assess all industrial conditions, Turkish Tourism has been taken in hand in SWOT view. Depending upon SWOT outputs some relevant strategies will be discussed for the Turkish future policies about tourism industry. JEL codes: G01, F01 1 Introduction Natural disasters and crises are neither rare nor new phenomena but in recent years they have achieved considerable prominence largely because of the globalization of business and international communications (Sausmarez, 2004). The world is becoming more interdependent and connected so that small-scale crises in one part of the world can have a significant impact on other parts of the world. Political instability, economic recession, disasters, terrorist attacks or the outbreak of war in one part of the world can dramatically reduce tourist travel patterns to other parts of the world. Tourism is therefore highly susceptible to external factors and pressures in the wider operating environment (Ritchie, 2004). World economy faces an unprecedented crisis, triggering one of the most severe recessions in generations. The world‘s GDP is forecast to decline by some 1.4% in 2009, according to the International Monetary Fund (IMF, July 2009), the exports have been dramatically reduced and all advanced economies are in recession (WTO,2009). Global tourism has been severely affected by the current financial and economic downturn. According to the United Nations World Tourism Organization (UNWTO) data, international tourism started to decline during the second semester of 2008, (Papatheodorou et,al, 2010) Tourism, though resisting better than some sectors, has become one of the latest sectors to feel the effects of the global recession. Markets started to deteriorate by mid 2008. UNWTO market monitoring indicates that the plummeting results of international tourism during the last part of 2008 have continued during the first months of 2009 (WTO, 2009). Moreover, while financial institutions around the world confirm the intensity of the crisis through various indicators, the negative trend in international tourist arrivals intensified during the first semester of 2009 in line with the prevailing financial situation (Papatheodorou et.al, 2010). Despite this fragility, few countries appear to make any advance preparations or provision for their tourism sectors in anticipation of a crisis. Instead, they tend to wait until after the event before starting to consider what action to take (Sausmarez, 2004). Tourism industry has direct and indirect impacts on both developed and developing countries economies. if any crisis arise the repercussions extend beyond activities directly associated with tourism (notably, airlines, hotels, and catering), to those supplying intermediate or final goods purchased by firms and employees in the industry, so that all sectors of the economy are affected to a greater or lesser extent. Governments then need to implement a range of policies to offset the crisis. Goverments are also faced with the difficult decision of what, if any, measures to take, particularly since the implementation of many measures is costly and their relative effectiveness varies. Policymakers need to evaluate the relative merits of alternative responses and consider the combination of policies to cope with the crisis (Blake and Sinclair, 2003). That means that policymakers should analyse the environment constantly and should predict the following crisis so that the tourism industry is ready for any crisis that could occur any where in the world. Turkish tourism has not been affected as much as its competitors as global economic crisis affected during the last crisis term. While in most countries around the world tourist arrivals have been declined, Turkey has SESSION 6A: Tourism & IT 383 received a higher rate in tourist arrivals since the global economic crisis started. Although tourist arrivals have been arrised, the tourism revenues have been declined in the year of 2009 and 2010 according to previous years. In this paper it is going to be analysed the conditions and related strategies of Turkish tourism against global economic crisis by conducting a qualitative view. In order to assess all industrial conditions, Turkish Tourism has been taken in hand in SWOT view. Depending upon SWOT outputs some relevant strategies will be discussed. 2 The Literature Review of Crisis and Global Economic Crisis and its Effect on Tourism Industry Undoubtedly, the tourism industry is one of the most susceptible and vulnerable industries to crises. (Santana, 2004) However the literature on crisis and related strategies for tourism industry under the global economic crisis in tourism is limited. These studies that have published have mainly examined the impact of specific crises on a tourist destination or region and a country (Lee et.al., 1996; Henderson, 1999; Faulkner, 2001; Hope & Klemm, 2001; Pizam and Fleischer 2002; Huang and Min 2002; Blake and Sinclair 2003; Taylor and Enz 2002, Coles, 2003; Okumuş and Karamustafa 2005, Okumuş et.al.2005; Lim and McAleer, 2005; Anderson, 2006; Athanasopoulos and Hyndman, 2008; Chu, 2008). The study by Taylor and Enz (2002) reveals that the tragic events of September 11 in the United States affected hotel segments in different ways; for example, high-priced hotels experienced a greater decline in business than budget ones. Upscale hotels relied on marketing strategies to attract new customers, while budget ones offered discounts. The manner in which governments respond to shocks in the tourism industry is important, as it may influence the rate of recovery of the industry (Prideaux, et.al., 2003). After September 11, the US government passed a $15 billion relief package that helped its faltering tourism industry recover, and this saved many businesses from bankruptcy. Blake and Sinclair (2003) claim that if there had been no such relief package, the US industry would have suffered from the terrorist attacks much more than it did. Blake and Sinclair (2003) studied the low season of the US tourism industry after the September 11 attacks, and found that tax reductions were the most efficient way to handle the crisis. The immediate government responses to the September attacks included law enforcement activity, disaster relief, and security measures. Eleven days after the attacks, Congress passed the Air Transportation Safety and System Stabilization Act, to ―preserve the continued viability of the United States air transportation system‖. This Act provided federal credit to airlines totaling $10bn; compensation to airlines totaling $5bn; compensation for airlines facing increased insurance premiums; limitation of the extent of liability by airlines for the results of terrorist acts; allowances for airlines to make late payment of excise taxes; compensation for individuals killed or injured in the September attacks; and spending of $3bn on airline safety. (Blake and Sinclair , 2003). Chu (2008) used the Asian financial crisis and the September 11 attacks as examples of economic and political blows, and analysed the accuracy of using a fractionally integrated ARMA model to predict tourism and make comparisons. Pizam and Fleischer (2002) showed that, between May 1991 and May 2001, tourism demand in Israel was highly dependent upon the frequency of terrorist activities. Terrorist attacks resulted in a drastic reduction of international tourists arriving in Israel. According to Mansfield (1999), the Israeli government often failed to give support to tourism organizations during and after several crises. Henderson (1999) reports that the results of a survey of leading tourist attractions in Singapore investigating the consequences of the Asian financial crisis indicated that there was no crisis management planning and that there was a need for such planning in the light of the nature of the travel and tourism industry, with its exposure to risk and disaster. By contrast, Coles (2003) reports that in the case of the Food and Mouth Disease in the United Kingdom, regional tourism offices in the southwestern part of England where the disease had broken out sponsored marketing strategies that helped
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