HLT 7038 - Crisis, Risk & Change Management: Egypt Tourism Case

This case study examines the crisis within Egypt's tourism industry, triggered by political instability, terrorist attacks, and airline disasters, leading to a significant decline in tourist arrivals and economic impact. It discusses the various responses from governing authorities, tourism establishments, investors, and the media. Theoretical approaches to crisis management are explored, including crisis management strategies, contingency planning, and the structural-functional systems theory. The analysis highlights the lessons learned for future crisis preparedness within the tourism sector and the broader economy. Desklib provides access to similar case studies and solved assignments for students.

Running head: CRISIS MANAGEMENT
Crisis Management
Name of the Student
Name of the University
Author Note

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Table of Contents
Introduction................................................................................................................................2
Crisis Typologies...................................................................................................................2
Theoretical Approaches in Crisis Management.....................................................................3
Crisis in contemporary global tourism industry: Case Study.....................................................6
Crisis in Tourism and Hospitality Industry of Egypt.............................................................6
Response to the concerned crisis in Egyptian Tourism industry.............................................10
Responses of the governing authorities................................................................................10
Responses of the tourism establishment and enterprises.....................................................12
Responses of investors and financial institutions.................................................................13
Media and Public Response.................................................................................................13
Lesson learnt for future............................................................................................................14
References................................................................................................................................15

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Introduction
The organizations and industries in the current global scenario, operate in a complex
and integrated as well as inclusive framework, where not only the endogenous factors within
the organizations but also the exogenous factors, which lies outside the operational
frameworks of the organizations (like that of the social, economic, political as well as overall
dynamics of the country and of the overall global scenario), affect the performance and
working of the organizations (Johansen, Aggerholm and Frandsen 2012).
These events often lead to occurrence of crisis situations in the organizations and in
their operational frameworks. In this context, “Crisis Management” is defined as the method
by which these organizations combat the occurrence of disruptive or unexpected events,
which have negative implications on the organizations and the people related to those
organizations (Drennan, McConnell and Stark 2014). Keeping this into consideration crisis
management has been one of the primary components of immense importance in the
operational framework of the global Tourism, Hospitality and Event (THE) industries, as
these industries are considerably affected by the exogenous as well as endogenous factors
present within the industry as well as in the countries in which they operate (Crandall, Parnell
and Spillan 2013).
Crisis Typologies
The global Tourism, Hospitality and Event Industry, in their operational framework,
faces different types of crisis, which differ in terms of their nature and magnitude, the
implications of the same as well as the aftermath and the modes of addressing the issues (Mat
Som, Ooi and Hooy 2014). The primary types of crisis which usually occur in the industry
are as follows:

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a) Natural Crisis- The crisis which arise due to the occurrences of natural calamities like
hurricanes, flood, earthquakes, tsunamis and other incidents and have implications on the
organizations as well as on the stakeholders and individuals related to the organization are
included in this genre of crisis.
b) Civil Crisis- These types of crisis occur due to the political and social tensions within a
country and also due to the socio-political tensions occurring between different countries and
which lead to occurrence like war, terrorism, shootings, violence, sabotage and similar
incidents. These types of crisis also have considerable negative effects on the organizations
and their management (Hajibaba et al. 2015).
c) Technological Crisis- Crisis often occur in the organizations in the contemporary period,
due to the technological failures or glitches, with the magnitude of the same varying
considerably depending upon the nature of technological failure. The technological crisis can
range from simple power blackouts, software failure to as critical and widespread ones like
nuclear meltdowns and similar occurrences.
d) Health Crisis- Epidemics and diseases, especially those which spread across the countries
rapidly, like SARS, swine flu, malaria and others can also affect the industries, especially the
tourism and hospitality industry as the customers become sceptic to a considerable extent
(Ghaderi, Som and Henderson 2012).
There also remains other forms of crisis like that of confrontation crisis, crisis of
malevolence, crisis arising from misdeeds of the organizations and also that of workplace
violence and others, each of which affect the organizations and their profitability and
sustainability considerably.

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Theoretical Approaches in Crisis Management
There exists different theoretical as well as conceptual models in the aspects of management
of crisis in the contemporary organizations in the global framework, the primary ones being
discussed as follows:
a) Crisis Management Strategy- This strategy is used to avert crisis in the company’s
operation framework, which includes future prediction based on the analysis of the current
exogenous as well as endogenous environments of the business. The strategies include
control of the current status as well as strategy selection and implementation for coping up
with the probable as well as ongoing crisis (Coombs 2014).
b) Crisis Management Model- This model is based on the three components of the crisis arc,
which are crisis avoidance, crisis mitigation and recovery:
Figure 1: Crisis Management Model
(Source: Resilience.acoss.org.au 2018)
Thus, the three phases in the management of any crisis under this model are as follows:
 Diagnosis of the expected dangers
 Choice of appropriate Turnaround Strategy

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 Change process implementation and monitoring (Moutinho and Vargas-Sanchez
2018)
b) Contingency Planning- One of the primary crisis management model, which is often
taken into account by the contemporary organizations is that of the preparation of the
contingency plans. The components of contingency planning for crisis management are
primarily as follows:
Figure 2: Components of Contingency Planning in Crisis Management
(Source: Herbane 2013)
Often this type of framework makes provision for the organizations to develop
simulated scenarios and rehearse the management of the probable crisis in the form of drills.
A proper and efficient contingency planning system have attributes like fast execution and
facilitation of genuine information as well as guidance for future business continuations
(Herbane 2013). The spokesperson plays an important role in these kinds of plans and is
bestowed with the vital responsibility of dissemination of information and often provision of
manipulated and fabricated information can lead to backfire of these types of crisis
management frameworks.

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d) Structural-Functional Systems Theory- This theory of crisis management emphasizes on
the need for the provision of correct information at the time of crisis in an organization.
Keeping this into consideration, this theoretical framework of crisis management in an
organization addresses the details and accuracies of information channels and also facilitates
the organizational communication flow by creating proper networks, thereby helping the
companies to take actions at the times of crisis (Parsons 2017).
e) Crisis Leadership- This theory highlights the five competencies which are needed to be
present among the leaders of the organizations, which help in restructuring of the
organizations at the time of crisis as well as in the times after crisis. These skills are as
follows:
 Building up trust in the organizational framework
 Mindset reform of an organization
 Identification of potential threats for the organizations
 Decision making skills and skills of taking abrupt actions
 Taking lessons from crisis and incorporating the same in the organizations (Bussy and
Paterson 2012)
Apart from these conventional theoretical and conceptual frameworks which are
present in the aspects of crisis management, there also remains several other theories like
those of diffusion of innovation, unequal human capital as well as the role of media in the
aspects of crisis management in the contemporary organizations (Jia et al. 2012).
Crisis in contemporary global tourism industry: Case Study
Keeping the aspects of crisis management in the contemporary organizations and the
importance of the same, especially in the current dynamics of the Tourism, Hospitality and
Event Industry, the current section of the report tries to emphasize on the current crisis

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situations and risks which is experienced by the tourism industry as a whole in Egypt in the
contemporary period (AlBattat and Som 2013).
Crisis in Tourism and Hospitality Industry of Egypt
Egypt, being a country with centuries old architectures and rich historical background
had been one of the most attractive travel and holidaying destinations for a major share of the
international tourists from all parts of the world. Over the years, owing to increasing number
of inflow of tourists, the tourism and hospitality industry of the country had developed
substantially, creating huge employment scopes as well as economic prosperity of the nation.
The economic welfare of the residents of the country has also increased considerably, owing
to the development of the industries and services with direct and indirect linkages with the
tourism industry of the nation (Hanna 2013).
However, in the last decade, especially post 2013, the country has been experiencing
huge turmoil in its socio-political scenario owing to the military coup as well as the airline
disaster series (which started with the downing of the Metrojet 9268) and the terrorist attacks
which are taking place in the country over the last few years, which primarily include the
bombing of churches, attacks on Red Sea resort, bus attacks, Arish attack and many more
(Topham and Macalister 2018). The crisis being primarily a type of civil crisis, has led to
immense negative implications to the overall economy.
All these attacks have not only led to considerable disturbances in the political
scenario of the country but has also led to considerably downturn of the economic conditions
of the country, by causing many industries, especially the tourism and hospitality industry of
the country owing to the significant increase in the level of panic and scepticism among the
international tourists, who are increasingly replacing Egypt with other safe holiday
destinations.

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Figure 3: Tourist Arrivals in Egypt over the years
(Source: Tradingeconomics.com 2018)
As is evident from the above figure, the arrival of international tourists in Egypt has
decreased substantially over the last few years, with the numbers decreasing by nearly 42% in
2016 from that was in 2015 (Ibrahim 2013). The tensed political situations and threat of life
loss have contributed significantly in the rising aversion of the tourists as well as of the
foreign flight companies and also because of the suspension of flights in many areas
including that of Sharm el-Sheikh, many of which used to be popular tourist destinations.
Over one year, from 2015 to 2016, the number of Russian tourists went down by 60%, while
that of the British tourists getting decreased by 17.5% and the German tourists getting
decreased by 10.4% (Geiger 2018).
This has in its turn resulted a huge decrease in the number of bookings of the hotels
and holiday packages as well as in the reduction in the revenue generation from the industry
as a whole and from those industries with direct and indirect linkages with that of the tourism
related activities in the country. This can be seen from the reduction in the share of the
tourism industry in the GDP of the country, which can be seen as follows:

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Figure 4: Share of travel and tourism industry in the GDP of Egypt over the years
(Source: Avraham 2016)
As can be seen from the above figure, the share of the tourism and travel industry in
the GDP of the country has decreased substantially owing to the reduction in the revenue
generation as well as activities in the concerned industries, which can be attributed to the
decreased inflow of tourists in the currently, which in turn has hampered the tourism industry
and has led to the creation of a acute crisis situation in the industry.
The effects of the crisis cropping up in the tourist industry has been of such huge
extent that the not only the tourism sector has been affected due to this, but the effects have
also been seen to trickle down to the overall economy of the country, in terms of the
stagnation of the economic growth and also in terms of considerable loss of employment
scopes in the country.

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Figure 5: Increase in the level of unemployment in Egypt over the last few years
(Source: Tradingeconomics.com 2018)
The unemployment in the country has increased substantially in the last few years,
much of which can be attributed to the loss of jobs in the textile and in the tourism sector of
the country.
Response to the concerned crisis in Egyptian Tourism industry
As discussed in the above section, the civil crisis occurring in the overall economy of
Egypt and particularly in its travel and tourism industry, has resulted into the creation of
immense concern among the stakeholders in the industry, which include the national as well
as the local government of the country, the tourist enterprises and establishments and the
investors and financial institutions which are engaged in the various tourism projects. The
concerned section of the report tries to analyse the responses (both immediate as well as over
the time) of the different stakeholders in the country, to the crisis situations arising in the
tourism sector of the country (Harb 2018).
Responses of the governing authorities
The primary stakeholder in the tourism industry in Egypt, being the government of the
country, it becomes one of the primary responsibility of the government of the country to

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manage the crisis occurring in the tourism sector of the country in the last few years.
However, the actions of the government of the country, especially immediately after the
initiation of the crisis in the tourism industry of the country are not seen to be substantial
(Harb 2018). The primary reason behind the lack of that much responsiveness of the national
government of the country, especially immediately after the occurrence of crisis, can be
attributed to the political instability and tensions prevailing in the country itself and the
repeated attacks which have affected the government infrastructure and operations massively.
The responses of the government of the country, especially the Ministry of Tourism,
in terms of crisis management in the industry, is found to be mainly reactive and not
proactive, in spite of their robust communication channels with other stakeholders of the
industry. There has also been a presence of contingency plan in the hands of the government
of the country as can be seen from the various plans which have been formulated by the
Crisis Management wing of the Ministry of Tourism of the country. These also include the
role of the tourism police as well as the disaster management wing and the national media in
combating the crisis occurred. However, the plan is not seen to be widely circulated among
the other stakeholders in the industry and the same has been seen to be narrow and selective,
which in turn has failed to fit, especially with different types of crisis occurring in the
industry, especially in the aspects of the potential crisis.
Thus, the crisis management process taken by the governing authorities of the country
is not seen to be efficient enough in the aspects of predicting and preventing the crisis and
building up a robust framework for doing the same. However, the government of the country,
in the recent years have been taking some steps to manage and revert the effects of crisis in
the tourism industry, which are worth mentioning. These particularly involves the strategy of
creation of an overall Sustainable Tourism Strategy (2020), which targets to increase the
international arrivals to 25 million and the per capita profit by 30%. For doing the same, the

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government has created encouragement in investment in these sectors, has liberalized the port
services, granted apron handling of the licensed flight companies (Egyptianstreets.com 2018).
The government has also provided TDA for increasing the land supply for hotel development.
The Ministry of Tourism has also launched different types of tourism like sports tourism,
shopping, residential, health as well as therapeutic tourism, in order to promote the industry
of the country in front of global tourists, thereby trying to reverse the impacts of crisis which
has occurred to the industry in the last few years. The Ministry has also been approaching the
European, Russian and African countries to assure them about the security of their citizens as
tourists in Egypt, which has also proved to be beneficial to a considerable extent (Boukas and
Ziakas 2014).
Responses of the tourism establishment and enterprises
One of the worst and direct hits of the crisis arising in the tourism sector of the
country has been the tourist establishments and enterprises, which have suffered a huge
decrease in their revenue and employment generation. The tourist enterprises have reduced
their package prices, with the support of the government to make the destinations attractive to
the international customers, especially of the developing and emerging countries like India.
The enterprises are also tying up with one another and with various airlines and hotel
industries to make the packages comprehensive and providing the potential tourists an
authentic Egyptian experience at one go and in affordable prices (Aktas and Gunlu 2012).
One of the primary advantages of most of the holiday and tourist destinations of the
country is that they are usually distant from the centres of disturbances and terrorism. In spite
of that, these destinations are strengthening up their security services and customer protection
infrastructures to ensure the tourists that they are safe. The airlines like Egypt Air and others
are also trying to address the crisis situation by providing attractive fare packages to the
customers, both domestic as well as international (Al Shobaki, Amun and Naser 2016). The

13CRISIS MANAGEMENT
enterprises, together with the government are also providing discounts for the government
employee and youths of the country itself to encourage them to travel and have holiday
experiences in the country.
However, most of the tourist enterprises and travel agencies do not have robust
knowledge about crisis management and limit their crisis management mechanism in
addressing the situations when crisis actually occurs, through a primarily defensive strategy
and most of them resort to price cut strategies as a coping instrument in these aspects.
Responses of investors and financial institutions
Although the initial phase of terror attacks and turmoil in the political scenario of
Egypt saw a considerable withdrawal of investment from the tourism and hospitality sector,
in the current period, mostly because of the attractive incentives and offers provided by the
government, the tourism industry is seeing some increase in the investment flow in these
sectors. However, most of these investments, especially the private ones, are congested
primarily in those areas which appear to be safer in the perceptions of the international
travellers. The scepticism is still not gone totally.
Media and Public Response
The media played a considerable role, both in positive and negative sense, in
responding to the crisis situation in the tourism sector of the country. Considerable
discrepancies were also seen to be observed in the public as well as international media,
regarding the extent and magnitude of the incidents happening in the tourism sector (Baker
2014). While the national media tries to keep in check the panic arising among people
regarding the incidents, the international media displayed the extent and intensity of these
incidents, thereby creating huge fear and tensions among people across the globe and the
country, which in turn has affected the tourism sector of the country adversely. Its only in the

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recent years that the fear of the travellers across the world is seen to be gradually decreasing,
thereby helping the tourism sector to some extent (Neuhofer, Buhalis and Ladkin 2014).
Lesson learnt for future
One of the primary lessons learnt from the inefficient and less than sufficient crisis
management as well as from the slow revival of the tourism sector of the country is that in
absence of a proper crisis management sector in the country, equipped with attributes like
ability to foresee potential dangers, efficiency in developing measures to avert the dangers, in
case of occurrence of any crisis the ability to react promptly and appropriately and the ability
to restore the stability in the sectors, the management of crisis situations become difficult.
Also, to manage crisis, a proper network among the different stakeholders and
communication channels with the service providers and the government authorities need to be
present.
As much of the negative effects of such incidents which have been observed to be
occurring in the tourism sector of Egypt, are on the reputation of the industry as a whole and
the same leads to the increase in the level of panic among the potential customers, it is of
utmost importance to maintain stability and proper dissemination of information of authentic
information without distorting the same and it is also important to ensure that the steps taken
to address the issues are also brought forward in front of the public. Implementing these
changes and monitoring of the overall crisis management framework can thus help in
averting as well as addressing the crisis arising in the future efficiently.

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