Tourism, Security and Safety From Theory to Practice

17
Hospitality Crisis
Management Practices: The
Israeli Case
Aviad A. Israeli and Arie Reichel
Learning Objectives
■
To understand the turbulent nature of the hospitality industry in Israel.
■
To understand how geopolitical development emerged into a demand crisis
that crippled the hospitality industry.
■
To examine factors considered as important by hospitality industry executives
for dealing with geopolitical crises.
■
To examine tactics actually utilized by executives in order to cope with crisis.
■
To investigate the possible discrepancy between factors viewed as important in
dealing with crisis in hospitality vs the actual utilization.
Introduction
1,2
Countries throughout the world derive a large part of the Gross National Product
from tourism and hospitality industries. Unfortunately, current times impose some
threats on these industries. One of the most significant of these threats is terror,
which has been experienced at diverse levels of intensity by different countries. For
example, the Israeli hospitality and tourism industry historically has been sub-
jected to cycles of various war and terror related crises (for a review of the con-
flicts from a hospitality and tourism industry perspective, see Mansfeld, 1999). The
current crisis in the Israeli industry originates from the intensification of terror
activities, and it provides an opportunity to study crises through a case example, to
look at the impact crises have on the hospitality industry, and the tactics employed
for coping with crises (in the short and long run). We believe that the present study
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can serve as an impetus for additional studies in other nations and locations that
will enhance the understanding of hospitality management crisis practices and
their effectiveness.
To achieve the purpose of this chapter, the study of crisis management practices,
a tool dedicated to this purpose first must be developed. An analogy between cri-
sis management and decision making is made in order to develop an evaluation
tool that is based on the principles and logic of the multi-attribute decision-making
approach (MADM). Next, the tool is validated by using it to investigate the Israeli
industry and to describe, using a large sample, crisis management practices or tac-
tics employed by managers in the Israeli industry.
The crisis in the Israeli hospitality industry (2000–2002), and in the Israeli econ-
omy as a whole, originates primarily from the instability of the peace process with
the Palestinians. The most apparent outcome of this crisis is a sharp decline in the
number of tourists arriving in Israel. In order to cope with this decline, the local hos-
pitality industry increases its reliance on the domestic market by offering a variety
of package deals. Consequently, the decrease in foreign visitors is compensated for
by an increase in domestic tourism, resulting in a change of consumer proportions.
As a result, while in 1995 only 40% of guests in Israeli hotels were from the domes-
tic market (Israeli Hotel Association, 1999), the numbers from March 2002 suggest
that this trend peaks to above 86% (Table 1 provides a summary of recent data). It
should be noted that the domestic market is powerful and organized. Therefore,
many consumers in this market understand that they have a powerful position and
use it for extensive price negotiations. The most recent economic performance of the