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Ms. SANDRA LEE
Permanent Secretary for Economic Development and Labour, Hong Kong
Mr. Frangialli, Ladies and Gentlemen,
Risk and crisis management is now very much an issue for all of us in the tourism
industry. We face new challenges every day: from accidents such as the recent
aircraft tragedy, to acts of terrorism such as the hotel bombings last year; war in
the Middle East to economic turmoil in Asia; natural disasters in South America to
new diseases on a global scale. From Iran to the USA, China to the UK, all of us
have to deal with events outside of our control.
My remarks today will focus on the Severe Acute Respiratory Syndrome or SARS
and how Hong Kong responded to the crisis. I will briefly cover the key stages of
our response with particular reference to the travel and tourism sectors. I will also
describe the recovery plan and how this has been implemented.
Tourism Risk Management for the Asia Pacific Region
In the recently completed report on Tourism Risk Management for the Asia Pacific
Region prepared by the APEC International Centre for Sustainable Tourism, Sir
Frank MOORE wrote in the introduction:
“In times of crisis, for any tourist destination the first concern must be for visitors.
Away from home, in unfamiliar surroundings, they are quickly disorientated and
very reliant on their hosts and the host communities in general. Adequate
planning for what has been seen as the ‘unexpected’ can be the difference
between a well-managed problem and a human and economic disaster.”
Mr. Francesco FRANGIALLI said in his remarks that:
“…the strategies for reacting in a crisis and for recovering from it are remarkably
similar from one tourism destination to another and from one crisis to the next.”
I might add that this is true for all crises and at all levels from the smallest
company dealing with the loss of a key employee to governments responding to
natural (or unnatural) disasters.
The Stages of Reaction
In my view, there are basically three stages in every crisis – the initial reaction
when the crisis emerges and the facts are unclear; the consolidation stage as the
nature and extent of the crisis becomes clear and the relief work becomes more
organized; and the recovery stage when the emphasis turns to helping those who
survive the crisis and the focus is on the future.
The SARS Crisis
In the same document, Peter De JONG the President and CEO of the Pacific Asia
Travel Association (PATA) pointed out that:
“It took SARS to drive home just how economically dependant the countries of
Asia Pacific were on travel for their wellbeing.”
I can easily illustrate this point by reference to Hong Kong.
For the first quarter of 2003, GDP growth in Hong Kong stood at 4.5% in real
terms over a year earlier. However, the spread of SARS caused GDP in the second
quarter of 2003 to fall to a 0.5% decline in real terms over a year earlier. The seasonally adjusted unemployment rate rose markedly, from 7.5% in the first
quarter of 2003 to 8.6% in the second quarter.
The blow to inbound tourism and the travel-related sectors was most severe,
particularly in April and May. From a positive 29% growth in visitor arrivals in the
first two months of 2003, the number of visitor arrivals dropped substantially by
65% year-on-year (from 1.4 million in April 2002 to 490,000 in April 2003); and
fell a further 68% (from 1.3 million in May 2002 to 430,000 in May 2003). Hotel
occupancy rates in April and May plunged to 22% and 18% respectively, from a
level of over 85% in the corresponding months of 2002.
What this meant in real terms is quite simple: from a vibrant and expanding sector
prior to SARS the tourism industries were devastated. Hotels that had only
recently had ‘full’ signs up now had no-one staying with them. Their F & B outlets
were empty. Their shopping arcades deserted. Our Airlines cut flights and routes.
Load factors fell as low as 20% from their previous high levels. Travel agents,
shops, restaurants, bars and many other businesses in the sector were closing
down. Staff were put on no paid leave or worse as businesses downsized. In
short the tourism sector faced ruin.
In response, the government quickly put in place a low interest loan guarantee
scheme targeted at the tourism sector to help employers pay salaries and cover
other operating expenses. We waived licence fees and reduced certain rates and
charges. All designed to help cushion the effects of the crisis.
Fear of the Unknown
SARS emerged as an unknown disease from an unknown source, with unknown
methods of transmission and no known treatment. From a single index patient
staying in a hotel in Hong Kong, the disease was spread to Canada, Vietnam,
Singapore and eventually Europe and the USA. Hong Kong was faced with a
nightmare situation: a disease that seemed to be very easily spread in a city with
one of the highest population densities in the world. To compound the situation,
Hong Kong is also one of the major gateways to China, in particular Guangdong
where the SARS virus first emerged and is a major transportation hub in Asia with
links to all corners of the Globe.
I do not want to describe in detail the medical response to SARS. There have been
a number of detailed studies of this and anyone interested can access them on the
Hong Kong Government’s Department of Health website. Suffice to say that it took
the concerted efforts of the World Health Organisation, the Hong Kong
Government Department of Health, the Hospital Authority, and academics working
together with overseas agencies such as the Centre for Disease Control to identify
the virus and develop a treatment regime. The dedication, professionalism and
care of our health workers was truly one of the best thing to come out of this
situation. Unfortunately, even with all these efforts, eight medical staff were
among the 300 people who died as a result of SARS in Hong Kong alone.
Key Lessons
SARS, as many of you will be aware, emerged initially in Southern China at the
end of 2002 with cases growing in number through to February 2003.
Unfortunately, information on this new disease was not released in good time
despite the fact that there had been rumours and indications of something unusual
in Guangdong Province but no official confirmation that there was a major
problem. Once the SARS was brought into Hong Kong at the end of February
2003, it was too late to take steps to prepare and with the consequences that the
disease was to have a far-reaching effect in Hong Kong and around the world.
This was the first real lesson: by not having access to accurate information we
were not as prepared as we should have been and the situation quickly
deteriorated.
Because the extent of the problem was not initially evident, the Government and
the travel sector’s initial reaction was to give reassurance to visitors and residents
alike that there was little to worry about.
A classic example of this first stage was the handling of the Credit Suisse/First
Boston Hong Kong Rugby Sevens. This is a major international sporting event,
with 24 teams from all over the world. It has established itself as one of the preeminent
events in the local calendar, attracting over 10,000 overseas visitors to
Hong Kong in addition to the 25,000 local spectators. Scheduled to take place at
the end of March 2003, just as the SARS situation started to deteriorate, the Hong
Kong Rugby Union sought assistance from the Government to help them decide
whether or not to cancel or in some way change the event. The Tourism
Commission worked closely with the Department of Health and the Rugby Union to
provide accurate information on what was known at that time about SARS.
Detailed medical information was sent to all the participating teams to explain the
situation before they arrived in Hong Kong for the tournament. At the start of the
tournament the teams’ management were briefed on the latest developments and
steps were taken to protect the players from any risk of infection. Thanks to this
direct and open approach, and even though three teams did pull out, these were
replaced and the event went ahead successfully.
Through this experience, it became clear that there was a need to provide
accurate information to our overseas contacts and, in particular, to the travel
trade. A meeting was set up in early April at which travel trade representatives
were briefed on SARS. This was followed by specific briefings for the hotel
operators given their particularly important role in providing the most direct
contact with visitors to Hong Kong.
At the same time, the Department of Health, in conjunction with the Tourism
Commission and trade representatives, immediately started work on sectorspecific
health guidelines for hotels, the travel trade, airlines and transport
companies. These guidelines covered relevant information as diverse as how to
handle suspected cases for tour guides to hygiene for kitchen staff. A checklist of
actions to be taken in each sector supplemented the guidelines.
Beyond the sector-specific action, Government quickly put in place comprehensive
screening procedures at all ports and entry points to Hong Kong. The objective
was to try to ensure that travelers on arrival were basically healthy, give each one
information on what they should do if they experienced symptoms of respiratory
tract infection and to facilitate tracing should cases subsequently emerge.
In view of the uncertainty over how SARS was spread, Government also took
action to suspend all schools and to conduct home confinement for all those who
had been in close contact with SARS patients: not just medical staff but also
family members and casual contacts.
It is true to say that Hong Kong went from a vibrant, energetic city to a city in fear
in the space of a few days.
Communication, Communication, Communication
It was clearly evident that the only way to deal with the panic that was starting to
get a grip was to use every possible means to communicate to the public the
situation accurately. Not only were traditional means such as daily press
conferences and media briefings used but also emerging technologies were
brought into play. At one stage, when rumours spread that there was an
impending food shortage and the start of panic buying, SMS messages were sent
out to all mobile phone users to assure them that there was no shortage of food
and that there were adequate supplies to last months.
The importance of communicating the situation accurately to our overseas
contacts was also recognised at an early stage. The Tourism Commission
contacted the WTO to seek their assistance to disseminate relevant information to
all member countries. The Hong Kong Tourism Board (HKTB) did the same with
their contacts through PATA and also used their overseas offices to issue regular
bulletins drawn up on the basis of information provided by the Department of
Health. Even though the number of arrivals fell dramatically, it was important for
the eventual recovery that our trade partners were informed of developments to
establish the credibility of our messages.
Recovery
Almost as soon as the SARS epidemic struck, work began on a recovery
programme. For the tourism sector this took the form of a Tourism Coalition
formed in early April. This followed a meeting between the Government, the HKTB
and the trade at which the HKTB outlined proposals for a three-stage programme
that would be drawn up ready to put into effect as soon as the WHO lifted the
SARS advisory on Hong Kong. The objectives were simple: we needed to spread
the message that Hong Kong was SARS-free, we needed to rebuild Hong Kong’s
image as a safe and attractive tourist destination and we needed to get people to
travel.
The programme was supported by a multi-million dollar fund (US$128 million, of
which US$53 million was allocated for the Tourism Comeback Campaign) set up by
the Government as well as by industry contributions in the form of offers, giveaways
and deals. For example, Cathay Pacific Airways gave away more than
10,000 free tickets for HKTB’s promotion campaigns running through March 2004.
The hotels came up with a two-for-one-offer whereby anyone checking in during
the offer period would be entitled to a second stay free. Similar offers were made
by the retail sector and even the domestic transport companies gave away free
trips on their networks.
Central to the Campaign was a concerted effort to demonstrate that Hong Kong
was back on track. This was done by organizing a series of familiarization visits for
journalists and the travel trade, consumer and trade promotion events, and major
events involving international stars such as the Real Madrid football team, and, of
course, the Rolling Stones..
In the earliest stage, the emphasis was placed on rebuilding local confidence and
encouraging local consumption. The tourism sector was at the forefront of this
effort. Hotels gave discounts to local residents, tour companies offered new local
tours at very attractive rates, even the bars and restaurants came together to
encourage people to go out and start spending again.
In parallel, Government worked closely with the Mainland Authorities to open up
new channels for Mainland visitors to access Hong Kong. On 28 July, the Mainland
authorities introduced a new permit to allow individual travelers from eight cities
in Guangdong plus Beijing and Shanghai to come to Hong Kong. This scheme had
an immediate and dramatic impact on our situation. From arrival numbers of less
than 430,000 in May, the number had jumped to nearly 1.7 million by the end of
July and arrivals have continued to grow. We now finish 2003 with 15.5 million
visitors, a figure inconceivable back in April and May.
Cooperation
This is the second critical lesson we have learnt: the response to a crisis will be
more effective and the recovery more sustained if there is effective cooperation
among all parties. In the case of SARS, this meant cooperation within the tourism
industry in Hong Kong, cooperation between Hong Kong and China, and
cooperation between Hong Kong and international bodies such as the WTO.
Indeed, one of the most important symbols of our recovery was the decision by
the WTO and the BoAo Forum for Asia to hold a major tourism conference in Hong
Kong in July. Under the title “International Cooperation for Tourism Development
Under a New Paradigm: Revitalizing Tourism in Asia” the conference saw nearly
1000 delegates from all over the world coming to Hong Kong to discuss issues and
exchange views on the revival of tourism in Asia. This event, perhaps as much as
any other, helped to demonstrate directly to the travel and tourism world that
Hong Kong was over SARS and back in business.
I want to take this opportunity once again to say a big ‘Thank You’ to the WTO for
this vote of confidence in Hong Kong so soon after the SARS epidemic.
This was not the only event in which Hong Kong took an active part at the regional
and international levels. We participated in the Asia Pacific Ministerial Summit on
Crisis Management in June and attended the WTO General Assembly in Beijing in
October.
Another example of our growing efforts to work with other destinations is the fact
that during the year we signed two Memoranda of Understanding on tourism
promotion, with the Philippines and Mainland China respectively. We have also
stepped up joint marketing efforts with Guangdong and Macau.
There is no doubt in my mind with the increasing trend towards more restrictions
on travel to certain destinations caused by the fear of terrorism and the growing
preference for short break vacations that the future of tourism lies in intra regional
travel. I also believe that Asia and particularly China will be the most important
source market and destination for tourists in the next few years.
Hong Kong has already seen the effects of the growing liberalization of the China
market spurred as much by the impact of SARS as by the growing affluence of the
population.
The Future
Recent news about the re-emergence of SARS in Guangdong has demonstrated
clearly the need for constant vigilance. Hong Kong has maintained temperature
checks and screening at the border over the last few months and has recently
stepped up these measures. We have also boosted efforts to promote hygiene and
healthy living: a high-level team chaired by our Chief Secretary has been formed
to oversee efforts to clean up the city and promote health and hygiene among our
local population. We have reviewed our sector specific guidelines and established a
standing crisis management group within the tourism sector. This will meet every
three months or more frequently as necessary.
On the medical side, a new Center for Disease will shortly be set up to ensure that
Hong Kong is ready to tackle SARS or any other medical emergency in a more
effective manner. New isolation wards have been created in our hospitals and staff
training on the treatment and prevention of communicable disease has been
stepped up. The supply of essential protective gear for medical and frontline staff
has been improved and staff made familiar with the procedures for dealing with
suspected cases.
New Tourism Attraction
Beyond the prevention and treatment of medical emergencies, we are looking
firmly to the future.
We are investing in new Tourism products, most notably the Hong Kong
Disneyland, a new Cable Car system to open up Lantau Island and a new Wetland
Park to showcase our natural heritage. We are redeveloping heritage sites and
making them available to the public in a way that has not hitherto been possible.
We are also upgrading our existing attractions to make them more suitable for the
21st Century.
We are monitoring closely private sector initiatives to develop new tourism
products. For example, work is underway on new hotel developments that will
result in there being some 12,000 additional hotel rooms in Hong Kong by the end
of 2005.
We are also investing in training to ensure that we have people with the
appropriate skill set available to the tourism industry in Hong Kong.
All these investments are intended to help the tourism industry grow in the years
ahead. It is a clear sign of our confidence in the future of tourism and in the future
of Hong Kong as a major destination in its own right and as ‘Asia’s World City’.
Conclusion
It is clear that tourism as an industry is very vulnerable to events and crises that
can occur locally or half way round the world.
SARS in particular demonstrated the importance of public health and hygiene and
the need to ensure that destinations are ‘safe’.
Strong leadership in conjunction with community effort is essential to the initial
response to any crisis.
Accurate information on the crisis must be made available in a reliable and
effective manner to combat the threat of rumor and panic. Such information that
is available must be carefully considered and presented in a clear and
unambiguous manner, if possible direct to the target audience. The news media is
no longer the only or even the best means to communicate authoritative news.
Close liaison within Government, between Government and the trade and between
Government and international bodies and organizations is essential to ensure that
the key messages are also understood by the world at large.
Finally, it is essential to start to plan for the recovery even if the crisis is still
underway. This not only provides an early opportunity to consider how to
overcome the effects of the crisis but it also allows for those less directly involved
in the crisis management to feel they can contribute to the solution in a way which
may otherwise not be possible.
Thank you.
Economic Development and Labour Bureau
Hong Kong Special Administrative Region Government
February 2004
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
