TOURISM INDUSTRY

The Impact of Disaster on Tourism Industry

The Impact of Disaster on Tourism Industry

Introduction

The tourism sector today is dynamic and profitable with high growth potential. Worldwide, tourism accounts for 3.6 percent of the gross domestic product (GDP) and 9.5 percent of capital investment. The number of jobs directly in tourism and recreation is 74.5 million, and 225 million counting its association with other sectors. In the next ten years, the tourism industry worldwide is expected to grow 4-5 percent per year.

Tourism is viewed as an opportunity of economic growth in many developing countries. Many developing countries in Asia including Thailand and India have focused on its tourism industry to attract international investment. Tourism has become a major source of foreign revenue in Thailand. However, these countries are concerned regarding the environmental impact of increased tourism. Disaster management is another major concern for these countries. The Asian Tsunami of 2005 nearly destroyed the tourism industry of Thailand. This essay will focus on the theoretical and practical aspect of Impact of Crises on Tourism Industry. The essay will highlight the consequences of 2011 earthquake in Japan and the impact on Japanese Tourism Industry.

Tourism Risks: Theoretical Aspects

The problems of the tourism industry should be analyzed on the basis of risk theory in the operations of business systems. This theory has been fairly well studied in the economic literature for manufacturing, financial, insurance, and other institutions, but methods of risk assessment and management for tourism have received much less attention.

Generally, tourist risks can be divided into two groups: potential risks for tourists in planning and taking tours (tourist risks proper) and economic or business risks stemming from the activities of tourism firms. The third group involves natural risks such as earthquake, tsunami and other. The first group of risks includes factors associated either with material and financial losses (loss or damage of property during trips, financial losses, theft, and fines) or threats to the tourist's life and health. The second group includes a large number of various types of risk inherent in the operations of tourism and recreation industry that occur due to the sector's complexity and diversity (UNWTO 2007, pp.6). The third group includes the risk of adverse impact of natural disasters on the tourism industry. This includes direct economic impact on industry and indirect impact on the overall economy and future outlook of the industry.

Assessment and management of tourist risks should be based on an interdisciplinary approach to the economics of tourism and study results of cognate disciplines (law, ecology, health care, mathematical methods, information technologies, etc.). The System of National Accounts 1993 understands a sector as a group of institutional units engaged in similar types of activity. The characteristic types of activity in tourism include several classes of sectors in their traditional understanding and link it with various spheres of social production (Jolliffe & Fransworth 2003, 312).

The income (value added) created by subsystems of the tourism industry is not all classified as value added produced in the tourism ...