Impact of covid of GDP

IT Governance Publishing

Chapter Title: THE DEVASTATING EFFECT OF THE SARS PANDEMIC ON THE TOURIST INDUSTRY – CATHERINE FEENEY Book Title: In Hindsight

Book Subtitle: A compendium of Business Continuity case studies

Book Editor(s): ROBERT A CLARK

Published by: IT Governance Publishing

Stable URL: https://www.jstor.org/stable/j.ctt7zsx8f.17

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148

CHAPTER 10: THE DEVASTATING EFFECT OF

THE SARS PANDEMIC ON THE TOURIST

INDUSTRY – CATHERINE FEENEY

‘Looking at underlying drivers of disruption. . . concern

over a future pandemic is consistently affirmed across

sectors and geographies.’ – (Bird, 2013).

Recent Business Continuity Institute surveys have

demonstrated that pandemic is a threat taken very seriously

across all sectors. The UK Government considers pandemic

a ‘Tier 1’ threat to the country’s economy and security,

alongside terrorism, war and cyber threats. With the

position of global watchdog against health threats, the

World Health Organisation (WHO) advises us that we can

expect more pandemics in the future. Unfortunately, the

WHO is unable to tell us when they might strike, what form

they might take, and what effect they might have on both

humans and animals. History has taught us, however, that

pandemics can devastate the population.

First highlighting tourism’s position as a major global

industry, this study goes on to look at the effects of a

pandemic on the trade by considering the case of ‘Severe

Acute Respiratory Syndrome’ (SARS) between 2002 and

2003.

By their very nature pandemics are unpredictable and have

severe health risk implications. SARS is a highly

contagious and potentially fatal condition for which there is

no known cure. With a very mobile global population,

SARS quickly spread from South-East Asia with cases

being reported across the globe. The consequential threat

this presented to the tourism industry was immense. The

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10: The Devastating Effect of the SARS Pandemic on the

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rapid and negative reaction of the travelling public during

the crisis caused much hardship throughout the tourism

industry.

The tourist industry – fragility versus resilience

History has demonstrated that tourism is a fragile industry

when faced with health and safety threats to travellers.

Consumer confidence will quickly evaporate in reaction to

adverse events such as terrorism, natural disasters, high

profile disasters, civil unrest and health concerns. London’s

7/7 bombing is estimated to have cost the UK capital’s

tourist economy £4 billion. The 9/11 attack on the World

Trade Centre saw close to 600,000 jobs lost, of which

279,000 were in the tourist industry.

The capsizing of the Costa Concordia in 2012 resulted in

32 deaths while the economic cost to the wider cruise

industry ran into hundreds of millions of dollars. Even the

author was offered a buy-one-get-one-free holiday as cruise

companies struggled to fill their ships.

The cost in human fatalities from the 2004 Asian Tsunami

was horrific with the immediate economic outcome being

felt most acutely in the tourist industry. In the case of

Thailand, the estimated 8,000 fatalities was a comparatively

small percentage of the international disaster total of those

reported killed or missing. Tourism accounts for 6% of the

country’s GDP, but in the six Thai provinces directly

affected by the tsunami it was as much as 90%. Moreover,

in the six months that followed the disaster, hotel

occupancies in Phuket plunged from 63% to 27%.

Tourist behaviour with regard to Thailand can be compared

to the reaction that Israel experienced in response to

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10: The Devastating Effect of the SARS Pandemic on the

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150

terrorism. During 2000 Israel welcomed close to 2.5 million

visitors, but in October 2000 widespread and continued

violence broke out when the PLO launched their Second

Intifada. Over the four years of this conflict, tourist

numbers dropped by 66%. Lost tourism income amounted

to billions as hotel occupancy dropped as low as 20% and

security costs soared, but it was not entirely a negative

experience for the industry. To survive, hotel operations

had to become lean, learning how to recalibrate their break-

even occupancies from 45-50% to less than 30%.

Paradoxically Israeli tourism benefited from the Intifada,

becoming well positioned to exploit more peaceful times.

In the case of SARS, not just national but global tourism

felts its affects.

Developing a strategy for resilience is essential to ensure a

minimisation of disruption, and is particularly important for

sustaining businesses in this essential global industry. It is

paramount for tourist destinations and their products in the

eventuality of customer exposure to health risks, especially

in the case of a serious pandemic. Travel and tourism is

heavily dependent on an intact environment, whether this is

a natural, cultural, social or health environment. Although

the sector is resilient it can be easily affected by negative

events.

The economic importance of tourism in the emerging

millennium

‘The business volume of tourism equals or even

surpasses that of oil exports, food products or

automobiles.’ – United Nations World Tourism

Organisation.

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10: The Devastating Effect of the SARS Pandemic on the

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Sometimes referred to as a ‘social phenomenon’, the

significance of tourism is considerable. It is now deemed

one of the major arenas in international commerce, and

represents at the same time one of the main income sources

for many developing countries. There are various

definitions of the tourism industry. For example:

‘It [tourism] comprises the activities of persons

travelling to and staying in places outside their

usual environment for not more than one

consecutive year for leisure, business and other

purposes not related to the exercise of an activity

remunerated from within the place visited.’ – (Dale,

et al., 2005).

The importance of tourism growth to emerging countries is

enormous:

‘ odern tourism is closely linked to development

and encompasses a growing number of new

destinations. These dynamics have turned the

industry into a key driver for socio- economic

progress .’ – (Ambedkar, 2013).

This ‘driver’ presents itself as a significant business

opportunity. Indeed, some nations have seen this as a

panacea for managing some of their economic problems.

Unfortunately, increased tourism is not always an adequate

solution; the industry’s significance for improving

economic prospects is addressed by the United Nations

World Tourism Organisation (UNWTO) in their statement

that, ‘The contribution of tourism to economic well-being

depends on the quality and the revenues of the tourism

offer.’ They do, however, offer support, acting to help

developing countries benefit from sustainable tourism. The

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10: The Devastating Effect of the SARS Pandemic on the

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significant business case for, and proven economic impact

of, tourism is outlined in Figure 10.

Figure 10: Facts and figures: why tourism matters

The UNWTO also state that that tourism is key to

development, prosperity and well-being and provides

opportunities for all nations. Despite the global economic

downturn, tourism has continued to flourish although its

growth has fallen short of predictions made at the turn of

the century.

The tourism industry provides a diversity of sectors and

products. 90% of the industry consists of small to medium

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10: The Devastating Effect of the SARS Pandemic on the

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enterprises (SMEs). The wide variety of products and

services they offer creates difficulties when trying to

develop homogenous solutions for the tourism business

continuity.

Globalisation and increasing accessibility has produced

travellers that are seeking to explore more exotic locations.

In 2012 there were 1 billion international travel arrivals.

The World Travel & Tourism Council expects this figure to

rise to 1.8 billion by 2030. Travelling by air predominates

at 52%, with road at 40%, water at 6% and rail at 2%.

Typical health issues threatening the tourism industry

Health risks can generate apprehension among travellers.

Pandemics are predominately linked with influenza due to

the historical predominance of the virus as the principal

contagious disease. Even so, conditions such as AIDS, foot

and mouth disease, pesticide contamination, malaria and

West Nile virus pose health hazards and also stimulate far

greater demand for safety and hygiene than ever before

Tourist anxiety is often fostered by the threat of exposure to

communicable diseases. This can be further complicated

when epidemiological investigations are unable to provide

timely warnings to the tourism industry, SARS being a case

in point. This can be further compounded by any inability

among local and national public health services to respond

to emerging threats. Countries, particularly developing

nations, may need support from international non-

governmental organisations (NGOs) such as the

International Red Cross, Médecins Sans Frontières and the

Disaster Emergency Committee.

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10: The Devastating Effect of the SARS Pandemic on the

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Background to managing crises in tourism

‘SARS was actually a major trigger for the

pandemic preparedness work for the travel, tourism

and aviation sector.’ – (Glaessar, 2010).

Prior to SARS, the majority of research on tourism crisis

issues had concentrated on economic and financial events

and impacts, although questions had been raised regarding

the reactive nature of tourism research versus the need to

develop better predictive capacity and theory generation.

The necessity was recognised for swift responses and

premeditative processes to reduce the impact of serious

health crises affecting the industry. Until recently, however,

the dearth of available literature on risk management in

relation to health crises has made it difficult to monitor the

industry’s progress and responses.

Even so, the identification of major risks in tourism had not

been totally neglected prior to the SARS outbreak. Several

authors had identified noteworthy risks including terrorism,

war and political instability, health, crime and cultural and

language difficulties.

Academic texts used as sources for this chapter have primarily

originated in the last 15 years. The release of these texts has

perhaps been driven by the fact that some of the worst crises

affecting the tourism industry have occurred during this time.

Concern surrounding the spread of disease due to the

phenomena of international tourism has now resulted in some

much needed attention from political scientists.

Globalised tourism has raised concerns regarding how

health issues are dealt with. Research points to a steady

increase in international travel as a driving force in the

global emergence and spread of infectious diseases.

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10: The Devastating Effect of the SARS Pandemic on the

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The SARS pandemic – a catalyst for change

‘Despite relatively few human casualties, SARS was

an economic tsunami — creating US$30 to $50

billion in losses over a period of just a few months.’ –

(TASW, 2011, p. 103).

SARS is an example of a major illness that provided a

catalyst for the UNWTO to focus and develop strategies

promoting efficiency in predicting and planning for

challenging threats to health. Originating in Guangdong,

China, in November 2002 it continued through 2003 with

cases being treated across 26 countries. It presented a

challenging situation due to the rapidity of the fallout

around the event, which stalled travelling and seriously

affected the tourism industry.

The Chinese authorities initially attempted to supress news of

the virus to avoid any detrimental effects to their economy and

prevent panic among their population. It was three months

after the initial outbreak in Guangdong before the Chinese

Ministry of Health advised the WHO that there were over 300

cases of the condition which we now know as SARS.

Unaware of the condition and its seriousness, Hong Kong

was totally unprepared for the outbreak that followed. A

Chinese doctor who had been treating SARS patients in

Guangdong checked into the Metropole Hotel and infected

several guests, most of whom were overseas visitors. They

subsequently returned home to destinations that included

Vietnam, Singapore and Toronto, taking the virus with

them. In fact, SARS was already spreading even before the

WHO knew of its existence.

On 12 March 2003 the WHO issued an unprecedented

global warning about SARS. The message was

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10: The Devastating Effect of the SARS Pandemic on the

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unambiguous – this new mystery virus presented a threat to

everyone on the planet. Strong recommendations were

issued about travel restrictions to infected areas while

airports introduced thermal imaging detectors, insisting that

anyone who appeared to have a temperature should have a

medical check.

‘Although we had developed a war plan, we never

thought we would have to use it.’ – Dr Julie Hall, WHO.

The WHO launched its war plan, designed to identify,

isolate and eradicate new diseases. It also persuaded some

of the best microbiologists in the world to work together,

something that was hitherto unprecedented. It was in a

Hong Kong laboratory that the SARS virus was identified

as being from the ‘coronavirus’ group and related to the

common cold. Researchers concluded that it would spread

like the common cold, via tiny droplets inhaled after an

infected individual coughed or sneezed. Influenza is far

more infectious than the common cold as it can hang in the

air. It was concluded, however, that SARS can survive for

up to 24 h on a surface such as a door handle or a lift button

and this may have facilitated some of the cross-infection.

This prompted recommendations to be more vigilant with

regard to personal hygiene and in particular to more

frequent washing of hands.

Quarantining victims plus anyone known to have been

exposed to SARS was considered to be the only way to

contain the disease. Hong Kong placed the residents of

entire apartment blocks in quarantine while in Toronto as

many as 10,000 people were ‘invited’ to go into isolation.

Some schools and hospitals faced the same fate.

On the ground in Hong Kong most restaurants, bars and

cinemas remained empty while the wearing of protective

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10: The Devastating Effect of the SARS Pandemic on the

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face masks became the norm. Airlines cancelled flights to

and from the territory as passenger numbers plummeted as

much as 77% in April 2003. Between March and May

2003, hotel occupancy rates dropped from 79% to 18%.

The Metropole subsequently rebranded itself as the

Metropark Hotel, perhaps in an effort to shed any lingering

stigma from SARS.

‘It looked like Hong Kong had no more future as it

appeared as the epicentre of SARS and people would

not want to travel there.’ – Gary Ling, Reuters

For tourism, SARS presented a double threat. Similar to

other industries, it needed to cope with the pandemic’s

effect on its own workforce but it also had to survive while

its customers stayed away.

The WTTC has estimated the devastation to Asian tourism

from the SARS outbreak. Up to three million people in the

industry lost their jobs in the most severely affected

jurisdictions of China, Hong Kong, Singapore, and Vietnam.

Combined with the decline in tourist arrivals across the rest

of Asia, even in countries that were largely or totally disease-

free, this proved to be a particularly difficult time for the

industry. The lack of cohesive planning was reflected in the

region’s wider tourism collapse, which the WTTC believes

can be attributed more to how governments reacted to the

perceived threat of the disease rather than to the real public

health danger posed. The SARS outbreak resulted in a 1.2%

decline in international tourism arrivals in 2003, with a 41%

drop in East Asia during the month of April. The

unprecedented WHO advice against non-essential

international travel contributed significantly towards this.

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10: The Devastating Effect of the SARS Pandemic on the

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The aftermath

Figures published seven years on demonstrate that a

pandemic’s economic and societal consequences can be

enormous. The broad range of after effects illustrate that the

results of the devastation cannot be accurately measured for

several years after the event. In the final analysis, SARS

affected 26 countries, had 8,098 cases, 774 deaths and

caused economic losses of US$60 billion, far greater

financial damage than was initially anticipated.

Figure 11, below, shows the points UNWTO identified

when looking at the outbreak as a catalyst for activating

change in the tourism industry:

1. What are the key

things that exist

now that did not

exist five years ago

as a result of

pandemic

preparedness?

Three triggers spurred the

development of pandemic planning

and preparedness:

 SARS

 The 2009 Mexican ‘Avian Flu’ outbreak

 The International Decade for Natural Emergency Plans

(1990-1999) whereby

‘National Emergency Plans’

(NEP) were developed in

many countries

Major areas for activity around

disease limitation included:

communications, sensitivity,

logistics and tourism.

2. What are the key

achievements of

pandemic

 Information management – importance of alerts

 High importance of targeted,

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10: The Devastating Effect of the SARS Pandemic on the

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preparedness for

the tourism sector?

two-way communication,

balanced information and

case management

3. What are the most

critical gaps that

remain in

pandemic

preparedness in the

tourism sector?

 Branding and communication issues

 Complacency

 Fast and sincere reporting

 International travel

4. What are the key

lessons that have

emerged from the

pandemic?

Pandemics are economically

detrimental to the travel and tourism

sector, particularly when insufficient

information is published not only

during but after an emergency is over

(usually due to a dearth of available

information). Also, the planning for

threats from health risks has lacked a

cohesive approach, and not just those

arising in developing countries.

The response to SARS and other

pandemics included the development

of strategic reaction that provided the

framework for managing threats to a

multi-faceted industry. Future

research will provide more in-depth

knowledge and resources to manage

different situations. The transparency

of the UNWTO, WHO and TERN

enables the tourism industry to

reflect and manage their business

continuity and resilience strategic

planning for the benefit of all.

Figure 11: The catalysts for change

Source: Glaesser 2006

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10: The Devastating Effect of the SARS Pandemic on the

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Lessons learned

During the years since the SARS pandemic the UNWTO

have been empowered through their experiences of dealing

with serious health issues. This has enabled the

development of a framework to manage health threats that

affect large numbers of travellers.

The tourism industry was clearly not prepared for SARS

and it suffered badly both economically and in terms of job

losses. In the aftermath it has been more focused on

preparing itself for any future significant health threats.

Actions taken include the creation of the Tourism

Emergency Response Network (TERN) in 2006, although

the 2004 Pacific tsunami also influenced this.

What went well

The diverse nature of the tourism industry, 90% of which is

comprised of SMEs, meant that strong leadership was

required from an international perspective. ‘Singapore

learned from the 2003 SARS pandemic the importance of

addressing non-health issues and having a single, national-

level mechanism for decisive decision-making.’ – (TASW,

2011, p. 41).

 A cohesive but collaborative approach emerged through

leadership from the UNWTO. Their surveys show that

the integration of travel & tourism into national

emergency structures and national emergency plans and

procedures has taken place from mid-2008. These

surveys also revealed that for the majority of countries,

particularly those depending heavily on tourism, an

additional ‘pandemic plan’ was an essential preparation

to run concurrently with the national emergency plan.

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10: The Devastating Effect of the SARS Pandemic on the

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 The excellent collaborative development of TERN by

the UNTWO is a positive step; the SARS outbreak

showed the need for interconnected planning.

What could have been done better

 The industry failed to maintain an intact environment for

travel and tourism during the pandemic. This could have

been achieved through complete awareness of the

pandemic situation and its restrictions, simulation

exercises, strong communication at all levels (local,

national and international) through various agencies,

plus constant vigilance to enable preparedness for a

pandemic and its consequences.

 Managing the external or macro environments to assist

in providing resources would have enabled all affected

countries to combat the pandemic with equal

effectiveness. Promoting holistic planning for health

crises is a global issue.

 Encouraging the remaining 28% of UN countries

without a national emergence plan to create one is

essential to maintain coherent global responsiveness.

What did not go well

 China’s delay in alerting the WHO to the health crisis

developing in Guangdong province left Hong Kong

unaware and exposed to the pandemic.

 Of great concern to the UNWTO was the lack of

assistance available to ‘newly industrialised countries’.

Managing pandemics in countries where public health

departments do not have the depth of resources available

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10: The Devastating Effect of the SARS Pandemic on the

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in developed countries is difficult; these countries

require support from the UN and NGOs to arrest the

spread of contagious diseases.

Other observations

‘SARS was not the killer disease that the WHO War

Plan had been designed for. But maybe it was a

dress rehearsal’ – (BBC World, 2003).

 World travel conditions for tourism have improved and

grown exponentially. Consequently, there is a need for

greater coordination among organisations responsible for

containing communicable diseases. Support must

continue for recently-established bodies which provide

communication and ensure tourism can continue in

affected areas. The role of public health organisations

when managing a health crisis is crucial. Governments in

cooperation with the relevant NGOs must provide a

cohesive response to managing contagious outbreaks.

 Tourism thrives when it is safe to travel. Ensuring health

and safety is beneficial to all stakeholders. Sharing

information and methods of operation can prevent the

dissemination of further strains of pandemic illnesses.

Subsequent improvements in tourism health

crisis management

The UNWTO is responsible for monitoring and managing

global health issues which might affect tourism. They have

clear and established guidelines for dealing with such

emergencies. Their coordination with various organisations,

particularly the WHO, in the event of pandemics and health

crises is paramount.

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In 2006 the United Nations established the Tourism

Emergency Response Network (TERN). TERN consists of

the world’s leading tourism associations who collaborate on

strategies for managing crises.

The UNWTO developed initiatives for working closely

with the travel trade after adverse events such as SARS and

the 2004 Indian Ocean earthquake threatened tourism

businesses on a national and global level. The UNWTO

established the importance of TERN and has stated that it

should be characterised by independence and

interdependency, with each partner working towards the

common goal of making travel and destinations safe for

tourists.

It has established a set of basic guidelines. TERN should:

 Work closely with the UN System.

 Share real time information and ideas.

 Give clear, concise and geographically specific public

messages.

 Establish close relationships with the media to better

spread information as necessary.

 Be activated in response to regional and global

emergencies of relevance for the travel and tourism

sector, or at the request of a TERN member.

Under the umbrella of the UNWTO there is a panel of risk

and crisis management programme members. They provide

mitigation strategies, actions and instruments to evaluate

risks of global and local importance. National organisations

can disseminate this information to their health protection

agencies, usually the public health authorities.

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10: The Devastating Effect of the SARS Pandemic on the

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Conclusion

The process of managing threats and developing resilience

to safeguard tourism has come a long way in the last 15

years. Closer collaboration with international governmental

and non-governmental organisations has provided a more

cohesive and constructive approach, enabling whole areas

of the globe to better manage their communications and

consequently their resources. Improved planning has helped

the majority of countries to closely monitor events and

ensure a safe environment for residents, travellers and

tourists.

There is a vital lesson to learn from the SARS outbreak,

which could help to reduce the impact of future pandemics

on the tourism industry. Some research supports the

argument that the tourism industry is not just a potential

victim of pandemics; with the explosion of global travel it

can also be part of the problem.

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