The global economic crisis as an ‘event’ within tourism

Posted on October 10, 2008

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Bob Cotton OBE, the Chairman of the Tourism Alliance, has written a letter to British MPs today, calling for specific action to support the UK’s tourism industry during this period of economic crisis:

“…What is needed now is a comprehensive strategy for UK tourism to market its way out of the present downturn. In 2002, when the country re-built tourism after the dual impact of the Foot-and-Mouth outbreak and the 9/11 terrorist attack, a £40m public private partnership marketing campaign was successfully undertaken. This resulted in generating a million extra visitors who spent £500m.

What is needed is a similar campaign now. In our favour, this time, is the Olympic Games in 2012, which provides an ideal hook on which to base a marketing campaign – an event that is forecast to generate an additional £2.1bn to the UK economy. Strong, committed government leadership would make this happen. I urge all MPs to support the Tourism Alliance in its campaign for government to take tourism seriously.”

This seems to take a rather one-sided view of the impacts of the present crisis on the UK’s tourism economy.  Yes, the value of international tourism to the UK is immense, but we have also seen the negative impacts of a shrinking domestic tourism market on the quality of our tourism product, especially outside of our ‘landmark’ destinations, and also on communities where domestic tourism has been the main economic activity in an area.

Although it is important for government to plan for the impacts of the banking crisis on all sectors of the UK economy, the scale of the current crisis is very different from that of foot and mouth, where the tourism industry could reasonably assert itself as the main victim of a disaster beyond its own making.  The same conditions do not hold true today.  All sectors of the UK’s economy will be affected by the lack of capitalisation in the money markets – perhaps the globalised tourism industry more than some, but certainly less then others.  As happens whenever the economic wind shifts direction, there will be winners and losers.  It  makes sense now to think about what this pattern of relative advantage will look like for UK tourism and to plan targeted assistance where necessary.  A blanket appeal to ‘increase’ tourism numbers is unlikely to work in a climate where consumer demand will fall almost universally, but understanding potential areas of relative growth will maximise opportunities for the Tourism industry, when government support will be spread very thin.

I’ve started to think about this using Holger Preuss’ model of tourism flows for mega-events.  Conceptualising the current crisis as an event allows us to situate it in space and time and, although this isn’t yet completely possible, to draw boundaries around it – enabling us to talk about it as an event, much in the same way as an environmental catastrophe, sporting fiesta or major policy change.  Using Preuss’ model for events of this kind is stretching the definition of event quite thin, but not so far as to break it.  This allows us to conceptualise the tourism impacts of the economic crisis as generating particular kinds of tourist behaviour.  Some of the categories will be more appropriate than others and some many need re-naming.  As a first draft, I’m going to sketch these out below, but will return to them at a later date to see whether they have value as analytical categories that can usefully applied to tourism development.

  1. ‘Changers’ – potential tourists affected by the economic crisis who take a trip during the crisis, rather than at some other that they would normally have travelled.
  2. ‘Casuals’ – tourists who would have made exactly the same trip under normal circumstances
  3. ‘Time-switchers’ – tourists who make a new decision to travel during the crisis, rather than at another pre-planned time
  4. ‘Avoiders’ – Tourists who would have travelled to a destination, but instead either cancel or re-time their trip in response to the economic crisis
  5. ‘Extensioners’ – Tourists who extend their stay during the crisis, perhaps as a response to favourable exchange rates
  6. ‘Event visitors’ – Tourists whose decision to travel is motivated by the crisis
  7. ‘Home stayers’ – Potential tourists who chose to stay at home during the crisis, spending their money in the local economy
  8. ‘Runaways’ – Tourists seeking to escape the crisis through travel

Decisions made by tourists in each of these categories can be explained by reference to changing currency exchange rates, job insecurity or redundancy, career breaks or delaying entry into careers, loss of confidence in their financial security and those tourists who are financially secure and not affected by the crisis.  These categories could then provide a useful segmentation tool for planning tourism marketing and forecasting demand for particular tourist products.  In particular, a model like this could be of value to the domestic tourism industry.

Ref: Preuss, H. (2005) The economic impact of of visitors at major multi-sport events, European Sport Management Quarterly, Vol.5, Issue 3, pp.281-301

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