Objectives
• To realize the fundamental reactions of competitors
• To recognize the range of one’s own reactions
Key terms and concepts
• Reaction of competitors
• Sanction possibilities
In the case of a negative event the competitors of a company or destination, can either become an alternative to the affected organization or also be affected. The aspect as to who should be considered a competitor has already been mentioned. It brings forward the question of the advantage that a competitor can gain from a situation of a negative event.
Viewed in general, the disadvantageous development of a destination is an advantage for competing destinations. This applies all the more if it concerns negative events that are limited to a local area and do not influence the volume of tourists as a whole.
In the first case, when only one company or a particular destination but not the competitors are affected by negative events, the following reaction possibilities exist for competitors:
• First, they can refrain from taking every form of advantage.
• Second, they can use the event to their advantage in that they emphasize the defects of the com- peting product within the framework of comparative advertising. This behaviour is clearly direc- ted against the affected organization and contributes actively to the problem being publicized.
• Third, competitors can confine themselves to indicating the non-existence of the defects in their own products. This type of reaction always comes into question if it is already well known that a negative event has occurred.
The competitors of the Fijian Islands reacted for example to the political instability of 1987 with an advertisement comparing the safety of their own destination:
Golden beaches, coconut palms and no coups!
War in the Solomons ended 1945. Why risk Fiji?
Source: Hall (1994)
During times of general uncertainty even just the announcement of a product modification is considered as a clear signal from competitors. After the attacks on a passenger plane with a surface-to-air missile in Kenya in 2002, British Airways announced the installation of antimissile systems on their aircrafts.
In the future, a more active form of reaction on the part of competitors will have to be reckoned with.
Continuously growing pressure to compete as well as the legal expansion of advertising possibilities (comparative advertising), introduced in Europe by the EU in October 1997, are two essential influential factors. This applies, above all, to the third case in which the non-existence of the defect for the own product is indicated in a ‘cautious manner’ without directly mentioning the competitor.
The legal and economic sanction possibilities open to the affected organization determine their opportunities to stop this advantage-taking. They can be classed as low. Seen from a legal point of view, there is no way of stopping such behaviour on an international level. Even from an economic point of view, sanctions are of relatively little use due to the polypolitical market structure of destinations and businesses (this is different, e.g. for tour operators building an oligopoly in Europe).
Independently of the possibilities that the affected organization has, it is finally the consumer who decides about the success of the attempted advantage-taking. Only if he approves the competitor’s behaviour and, therefore, buys their product, do these actions make sense.
Example 15: Think Swiss – Fly Thai
The following example illustrates the growing competition between companies. In October 2001 the Swiss airline com- pany ‘Swissair’ went bankrupt (see also Example 11). This bankruptcy was unexpected and was followed by a very emo- tional discussion of managerial and ethical values in Switzer- land. The Star Alliance member ‘Thai Airways’ used this moment and launched in early 2002 a Swiss wide promotio- nal campaign directed against the efforts to rebuild what became the successor airline ‘Swiss’. The campaign, which included in its advertisements all the graphical elements pre- viously used exclusively by ‘Swissair’, was widely recognised and accepted by the public. It also received mainly positive comments from the specialised travel press.
Fundamentally, it can be ascertained that the willingness of a customer to accept such rival behaviour rises with increased distance from the moment the negative event occurred. Behaviour initially interpreted as exploitive is then understood as informative and explanatory. The acceptance of active advantage-taking is also influenced by the customer’s will to sanction. Because of the stronger growing tendency of sanctioning nowadays, some already speak of it as a fundamental need of our time.
Moreover, the decision against a product is favoured by the interchangeability of products as a result of which the sanction of a product does not signify a fundamental abandonment. It remains to be assumed that this development will be more important for tourism in the future.
If in addition to the concerned organization, several or all competitors are affected by the negative event, this impact is caused either directly or indirectly. The generalization effect is responsible for the indirect effect by which an undifferentiated transfer of attitudes is applied to other similarly perceived objects. This occurs, for example, because products belong to the same categories, the same branches or to the existence of a ‘meta attribute’ such as the same nationality. In comparison to those directly affected, those indirectly affected will find out about this normally only at a later stage. In both cases,
Sanction possibilities
Picture: Thai Airways and New Identity
rival behaviour is fundamentally oriented to solve problems. From the point of view of the affected organization, it is advantageous that mutual efforts are undertaken to counter the event and its effects.
Associations to which the affected organization belongs also have an important function. As representatives of common interests, they are in a position to be objectively active towards the political sphere and social pressure groups.
Example 16: WTO’s Tourism Recovery Committee
Following the attacks of September 11 on the United States of America, a worldwide need for communication and coordination was advocated by WTO’s 14th General Assembly and led to the establishment of a Crisis Committee which was later renamed ‘Tourism Recovery Committee’. This Committee was the first of its kind to deal on an intergovernmental and worldwide level with the issue of crisis management in tourism. It is comprised of governmental representatives from different regions of the world (21), representatives of each of the different private sectors of the tourism industry (15) and leading experts on the subject.
The Committee met for the first time on 11 November 2001 in London on the occasion of the World Travel Market and discussed the initial report on the consequences of the September 11 attacks, which had been prepared by the WTO Secretariat. The members of the Committee presented the experience of their countries and companies in facing the actual crisis as well as their first plans, both strategic and operational, of how to handle this situation.
This first meeting of the Committee was followed by two regional meetings for the Mediterranean countries where tourism plays a very important role (in Madrid, Spain on 30 January 2002 and in Tunis, Tunisia on 1 March 2002).
Two other full meetings followed (in Berlin on 15 March 2002 and in Lon- don on 12 November 2002), especially in view of increased terrorism actions against the tourism sector in that same year (Djerba, Tunisia; Bali, Indonesia and Mombassa, Kenya). A Recovery Committee Meeting was organized in
Phuket, Thailand from 31 January to 1 February 2005 in reaction to the Tsunami in Asia in December 2004. In view of the wide and devastating consequences of this event this meeting was finally convened as an extraordinary session of the WTO’s Executive Council.
All meetings were based on the common interest to recover as soon as possible from the initial crisis and to benefit from the mutual exchange of experience. The following especially important issues were addressed:
• Monitoring the evolving situation and its impact on tourism;
• Strengthening WTO’s activities in the areas of security and tourism image building;
Members of the Tourism Recovery Committee at the Madrid meeting
• Supporting WTO Members, providing them with regular information and recommendations on how to handle the situation;
• Ensuring the co-ordination and consistency of the messages communicated regarding the evolving state of the tourism industry.
In addition, the Committee used as much as possible, either through its Chairman or another representative, the chance of communicating the messages of all countries concerned in a single voice.
Questions for review and discussion
• Explain what role associations can play in the context of crisis management.
• What sanction possibilities are at the disposal of a tourism company against those competitors that take advantage of a crisis situation?
• What are the chances of stopping such behaviour on an international level?
Suggestions for further reading
World Tourism Organization (2002), Special Report No. 19, Tourism Recovery Committee for the Mediterranean Region, WTO, Madrid.
World Tourism Organization (2002),Special Report No. 20, The Impact of the September 11th Attacks on Tourism: The Light at the End of the Tunnel, WTO, Madrid.
World Tourism Organization (2002), Special Report No. 21, Climbing Towards Recovery?,WTO, Madrid.
Restriction on private autonomy
Phase models