Political Instabilities’ Impact On Hospitality Industry Growth

Overview & Introduction

Growing rapidly and resulting in contributing almost 10% of the global GDP, the hospitality industry is globally one of the utmost service-based industries. At that, the industry holds within a large-scale variety of interconnected sectors, listing but not limited to food and beverages, airlines, theme parks and hotels. Accordingly, it is with no doubts that industry is one of the chiefs to increase one’s country’s competitiveness, power and reputation in terms of financial, political and societal doings. With such significance of the strenuous process of growth, this essay will identify and critically analyze how political instabilities are likely to impact the growth of the hospitality industry henceforward.

Terminology Defining

In pursuance of a focused academic area to address above objective, some terminologies must be defined before the identifications and analysis:

1. Political Instability: The occurrence of political disturbance or violence in one’s society, such as terrorism, parade, and so forth.
2. Growth: Financial expansion/development (visitor entry number & income).
3. Hospitality Industry: A tourism-focused industry that compasses a great variety of several associated sectors, such as, food and beverage and retailing industries. To infer the industry’s nature, which indicates the activities have grown up to service the need for hospitality.

Hospitality and Political Instability (Issues/Challenges)

How are political aspects coupled with the hospitality industry? It is shown that global issues and challenges associating with national security, democracy suppression, and political changes drastically impact how the world (from travelers’ perceptive) views as a tourism destination in terms of security and stability. For an instance, terrorism and other foremost humanitarian issues not only impact financially but also create damages of properties to psychological barriers for potential travelers to visit. It signifies a negative perception projected via platforms, such as media, exerts influences on travelers arrivals, cancellations in hotels and related ancillary services, resulting in a loss in industry income. The above is for a short-term instability; a series of continuous political unstable events would cost losses in employment for the industry professionals due to low in global demands and economic decline.

In a nutshell, the political climate of the globe greatly impacts the industry growth. In the followings, 2 types of political instabilities (as industrial issues/challenges) will be identified and critically analyzed, with real-world illustrations, for the impacts they have on the growth for the industry in the future.

Identification: Types of Political Instability

Before critically analyzing how political instabilities affect the expansion of the industry, it is key to identify them:

Terrorism

A universally agreed definition of terrorism is not existent. However, it can be concluded as a use of violence or threat of violence in pursuance of religious, societal and political purpose.

Why terrorism? In recent years, it has been globally witnessed that a myriad of terrorist events, from plane hijackings to bombings, have occurred. International terrorists attacks have risen from an average of 387 between 2000 and 2001. Documenting some of the events, they have important impacts not only on local hospitality economy but as well as the global economy. The 911 Terrorist attack shows a perfect illustration of a global incident of a political event. In the followings, real-world illustrations will be shown for academic evidence:

The Indonesia Bomb Incident (2002)

On the date of 12th October 2002, international terrorists planned a bomb attack in the Indonesian tourists' area, Kuta resort. The attack caused 202 lives involving 88 Australians and 38 Indonesians, resulting in becoming the attack that causing most lives in Indonesia’s history. Furthermore, the U. S. and Australia had decided to reissue travel warning for Indonesia, strongly advising people not going to Indonesia.

The Sydney Hostage Incident (2014)

On the date of 15th December 2014, a hostage-taking had been taken place in Sydney, Australia. The occurrence took place at the city center of Martin Place and near to cafe 18. Lasting for 16 hours, the whole event results in 3 people dead and 4 wounded severely.

The Terror in The U. K. (2017)

With regards to more recent cases, in the year 2017, London suffered a series of terrorist attacks from March to June. The specific timeline of such events has been demonstrated as below shown:

• Terror Attack at House of Parliament, 22nd March 2017
• Bombing Attack at Grande’s Concert, 22nd May 2017
• Terror Attack at London Bridge, 3rd June 2017.

Civil War

A civil war refers to a violent conflict inside a country fought by groups that work towards to take over the governmental power, or to alter government policies.

How about civil war? A growing realization that modern civil wars are underway is seeming. Even now, there are numerous on-going civil wars incidents in the world. Putting aside the human-lives cost, civil wars with violence have several serious economic impacts on the hospitality industry, also on every other industry; damages of infrastructures and building, reduction in employment opportunities, political uncertainty and increase in one’s country’s debt. In the followings, real-world illustrations will be shown for academic evidence:

• The Kurdish-Turkish Conflict (1978 - present)
• The Kurdish rebellions in Turkey is an ongoing armed conflict between Kurdish insurgent groups and the Republic of Turkey. Kurdish insurgent groups have been demanding separation from Turkey in pursue of Independency.
• The War in North-West Pakistan (2001 – present)
• The above war title set, a. k. a. The war in Waziristan is an armed conflict including Pakistan and organized armed militant groups.
• The Syrian Civil War (2011 – present)
• The war is an underway multi-sided armed conflict between the Ba’athist Syrian Arab Republic (with allies) and the several forces against the government and each other in amalgamations.

Critical Analysis

The hospitality industry is formed by individuals, like various service-based sectors, the most important role that pushes the industry is the spenders, in this case, are the visitors. In the followings, the critical analysis shall be focusing on how the above instabilities impact the growth of the industry, which covers the 1) visitor number and 2) financial terms.

The Visitor Number

A political change can either increase or decrease the competitiveness of one’s country. However, if a political instability is assumed, like terrorism and wars, that undoubtedly does the negative side of effects. According to a 2014 CNN survey, 70% of international visitors identify safety is the key in their decision-making process. Theoretically speaking, as political instabilities create large-scale damages and causality, even fatality, as well as creating psychological traumas. A research shows up to 80% people suffer from Post-Traumatic Stress Disorder after being involved in violent events. Let The Indonesia Bomb Incident (2002) be an illustration as a further development of the above explanation: Before that incident, there were 1, 285, 844 arrivals totally. Followed by a year after, in 2003, the visitor number decreased significantly to 933, 029. An official survey had been made, indicating the decline in the visitor number is due to travelers’ safety concerns.

Therefore, from a visitor’s perspective, among all the considering factors, the key is to consider the security level of the destination. Since political instability brings damages and causalities alongside with collateral damages, visitors would most likely to retarget other destination in order to keep themselves safe. The visitor entry number naturally decreases.

The Economic Situation of The Industry (Financial Terms)

As briefly mentioned, individuals are key to form a whole hospitality industry, like various service-based sectors etc. Yet the most important unit is the visitors as they are the main income of the industry. Applying a situation of declining visitor number, then the whole industry will be lacking economic pushes, which leads to a loss in revenues/profits. In consequences, the economy of the hospitality industry will fail. Let The Sydney Hostage Incident (2014) be an illustration as a further development of the above explanation: Before the incident, the inbound visitor spending was 157. 2 million, mostly from the visitors from New Zealand and U. K. . . Followed the year after, due to the fall in visitor number, the whole hospitality and tourism industry income decrease by about 30% (47. 16 million).

Furthermore, forces of violence and destruction are assuredly involved in political instabilities. Thus, the economy of the hospitality industry will be impacted due to the damages of the infrastructure and properties. For an instance, the most common transportation for international visitors is air transport. Yet, due to suffering from the consequences of civil war or other political instabilities, airline services are usually grounded for safety concerns. Some of them are even heavily damaged. Thus, the hospitality and tourism sector losses a number of visitors.

Let The Syrian Civil War (2011 – present) be an illustration as a further development of the above explanation: According to the report by The Times of Israel, satellite pictures have proved that show damages at Damascus International Airport from Israeli airstrikes during the civil war in Syria. It might approximately take months before airline operation resumes.

The Governmental Solution for Hoteliers/Hospitality Industry

In pursuance of preventing political instabilities from impacting the hospitality industry, as well as the one’s country, there are governmental preventions for an advanced defense mechanism, also minimizing risks and enhancing the capability to respond and recover from the attacks and instabilities.

Establishments of law are the most common solution, as the actions shall not be carried out before the government’s approval. Moreover, the preventions require not only one governmental depart to be carried out, but several, for example, the military forces. The last 2 decades, a governmentally authorized military force has been internationally recognized to fight against terrorism as a part of the defensive mechanism.

Prevention of Terrorism Act (1974 – 1989)

The above act from the U. K. was a set of preventions and laws aiming to fight against terrorism and threats by conferring military force for emergency power where potential threats are existent.

Conclusion

Based on above all identifications and critical analysis, It is beyond doubts that political instabilities bring plenty of negative impacts on global economies and local societies, especially on the growth of hospitality industry when they take place in the renowned and international tourist traps The occurrences also take in various forms, like terrorism, civil wars, and intense crimes, which bring fatalities and destructions of properties, as well as psychological trauma to visitors and locals. For directly impacts on the growth of hospitality industry, when occurring, political instabilities bring down visitors numbers as potential travelers concern about their personal safety as foremost, which eventually leads to a fall in industry income and profits. More to come, as well as the potential damages on infrastructures, like airports and iconic governmental buildings.

One thing is noteworthy that if one’s country is economically dependent on tourism and hospitality industry, then with above-mentioned impacts, the country shall have problems on losing the main income, and eventually, that leads to a failure in the economy. In closing, preventions are well taken nowadays in some countries, including strict immigration procedures – Visa Secure Programme. An effective action shall be created by more than one forces, like a joint of legal and military force.