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Examensarbete 15 hp
Juni 2020
The Tourism Industry in A Developing
Destination in Time of Crisis
The Impact of COVID-19 Pandemic on The Tourism
Industry in North Sulawesi, Indonesia
Teknisk- naturvetenskaplig fakultet UTH-enheten Besöksadress: Ångströmlaboratoriet Lägerhyddsvägen 1 Hus 4, Plan 0 Postadress: Box 536 751 21 Uppsala Telefon: 018 – 471 30 03 Telefax: 018 – 471 30 00 Hemsida: http://www.teknat.uu.se/student
Abstract
The Tourism Industry in A Developing Destination in
Time of Crisis
Margaritifera Jennifer Ignatia Tilaar
The tourism industry is a developing industry that has the risk of facing various challenges in the form of crisis. World Health
Organization (WHO) announced the COVID-19 pandemic on March 11th, 2020 that caused disruption in people's mobility across the world in order
to reduce the infection rate. Many industries were affected by this, especially the tourism industry as it relies on people traveling to
different places to run. The World Tourism Organization (UNWTO) already made initial assessment to see the potential economic impact. The
result helped the general population to understand the scale of impact of the crisis. However, business owners need to understand how it affects the contingency of their business. This research conducted a study towards business owners in North Sulawesi, Indonesia, as a developing destination, to assess the impact to the businesses through the five components of Service Management System (SMS) model. The result shows how big the impact is, which is in line with the initial
assessment from economic perspective by UNWTO, where three out of five components of SMS are impacted with minimum space for workaround.
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Acknowledgment
Contents
1 Introduction ... 1
1.1 Background ... 1
1.2 The Tourism Industry Development in North Sulawesi ... 2
1.3 Research Purpose and Research Question ... 4
2 Theoretical Framework ... 5
2.1 Entrepreneurship ... 5
2.2 The Impact of COVID-19 Pandemic on The Tourism Industry ... 8
2.3 Past Crisis, Emergency Management and Resiliency in The Tourism Industry ... 11
3 Methodology ... 14
3.1 Research Strategy ... 14
3.2 Literary Sources ... 14
3.3 Empirical Material & Data Collection ... 15
3.4 Questionnaire Guide... 15
3.5 Analyzing the Data and Ensuring Validity ... 15
4 Results ... 16
4.1 Respondents Background ... 17
4.2 COVID-19 Pandemic Impact Analysis ... 19
4.3 Contingency Plan and Sustainability Analysis ... 21
4.4 Additional Comments ... 23
4.5 Observation Result ... 24
5 Discussion & Conclusion ... 25
5.1 Business Characteristics ... 25
5.2 Problems During Crisis ... 25
5.3 Crisis Impact to Business Model ... 27
5.3.1 The Service Concept ... 27
5.3.2 The Market ... 28
5.3.3 The Delivery System ... 28
5.3.4 The Image ... 29
5.3.5 The Culture and Philosophy ... 30
List of Figures
Fig. 1 Service Management System (Normann, 2002) ... 1
Fig. 2 Number of International Visitors in North Sulawesi in 2008-2019 (Badan Pusat Statistik Provinsi Sulawesi Utara, 2020)... 2
Fig. 3 The Value Proposition Canvas (VPC) Tool (Osterwalder, et al., 2015) ... 5
Fig. 4 The Business Model Canvas (BMC) (Osterwalder, et al., 2010) ... 6
Fig. 5 VPC and BMC in SMS model ... 7
Fig. 6 Air Traffic Comparison Between End of March 2019 and 2020 (Pearce, 2020) ... 10
Fig. 7 Knowledge About Sustainability ... 22
List of Tables
Table 1 Main Business Types and Service Provided by the Respondents ... 18
Table 2 Distribution of Staff Number in Respondents' Companies ... 18
Table 3 Length of Respondents' Business Establishment ... 18
Table 4 Respondent's Position in the Company ... 18
Table 5 Correlation Between Variables of Respondents' Background ... 18
Table 6 Visitors' Origin ... 19
Table 7 Impact of COVID-19 on Business ... 19
Table 8 COVID-19 Pandemic Impact to Business in North Sulawesi, Indonesia ... 20
Table 9 Correlation of Company's Background to COVID-19 Pandemic Impact ... 20
Table 10 Companies Opinion on Their Survival Periode ... 20
Table 11 The First Time the Businesses Felt the Impact of COVID-19 Pandemic ... 20
Table 12 Actions for Contingency Plan ... 21
Table 13 Correlation Between Sustainability Knowledge and Implementation ... 22
Abbreviations
BMC Business Model Canvas
BPS Badan Pusat Statistik
CDC Centers for Disease Control and Prevention
CLIA Cruise Lines International Association
COVID-19 Coronavirus Disease 2019
IATA International Air Transport Association
MERS Middle East Respiratory Syndrome
SARS Severe Acute Respiratory Syndrome
SDG Sustainable Development Goal
SIDS Small Island Developing States
SMS Service Management System
UN United Nations
UNWTO UN World Tourism Organization
USA United States of America
VPC Value Proposition Canvas
WEF World Economic Forum
WHO World Health Organization
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1 Introduction
1.1 Background
Development of an industry does not always go smoothly as it will face challenges along the way. The tourism industry is no exception to this. Anything that has not been part of the daily routine and normal business and that needs to be tended to is considered a challenge, and the tourism industry faces many challenges in the form of natural disaster, unstable, political climate, terrorism, crisis and global financial condition (von Bergner & Lohmann, 2014). A crisis describes an event that leads to a failure in adaption to change (Ritchie, 2004). The COVID-19 pandemic can be considered a crisis because it has halted the mobility of people from the global to the community level, forced countries to close borders, slowed the economy due to less or even suspended goods production and distribution, among other things.
The tourism industry is encouraged to contribute to the sustainability of the destination. Therefore, assessing the sustainability of the business internally is important, especially in a crisis time, that we know will have a huge economic impact. According to a report from McKinsey & Company written by Craven, et al. (2020), consumers will spend less throughout the year and companies in the sectors that being hit hard will have to let their employees go or even file for bankruptcy. The report stated that even policies to help financially will not be enough to handle the downside effect of the pandemic, that this can have a bigger impact than the global financial crisis of 2008-2009. It predicts that the recovery will take time and probably will start around mid-2021.
Fig. 1 Service Management System (Normann, 2002)
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entrepreneurs due to increasing demand and new opportunities. Assessing the impact of crisis on businesses in a developing destination will give understanding to what should be put into priority when creating business to mitigate crisis. Financial assessment will give numbers to let the general population understand the scale of importance. However, for entrepreneurs, it will be more useful to understand the problems for the business operation perspective. Tourism revolves around service industry. Therefore, it is convenient to use the Service Management System (SMS) model to examine the businesses. The crisis impact will be assessed within the five components of SMS which are service concept, market, delivery system and image (Fig. 1).
1.2 The Tourism Industry Development in North Sulawesi
North Sulawesi (Sulawesi Utara) is an Indonesian province located in the northeastern peninsula of the greater island of Sulawesi. It borders directly to the Philippines in the north. The capital and largest city of the province is Manado. The province has been known for its famous Bunaken National Marine Park for decades. It attracts both domestic and international visitors, and even international researchers that have interest in marine science. The momentum of the start of the development happened on 2006, when the first flower festival was held in Tomohon, a town located 25 km south of Manado, which then being upgraded into international level two years later and changed its name to Tomohon International Flower Festival (Tomohon Flower Festival, 2019). The festival has brought attention to the region which is shown by the increasing number of international visitors, and gradually building more attractions, exploring nature-based tourism that was not brought into attention previously due to lack of demand, opening up to tourists whose interest are not only into diving or snorkeling.
Fig. 2 Number of International Visitors in North Sulawesi in 2008-2019 (Badan Pusat Statistik Provinsi Sulawesi Utara, 2020)
The increase of domestic flight frequency and the competitive plane ticket price, along with the growing of online travel agency startups within the period of 2010 to 2015, made the access to many regions in Indonesia easier, including North Sulawesi. It did not increase the
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number of international visitors though, but it was enough to make the provincial government realize that there was opportunity to expand its reach. The increasing trend of tourists from China travelling all over the world and the proximity of China and North Sulawesi, where it takes only five hours flight from southern China, created the chance to introduce North Sulawesi to international visitors. Several of Indonesian airlines started having chartered flights directly to Manado from cities in China, mostly the southern parts. This spiked the number of international tourists, as can be seen in Fig. 2, from 19.465 in 2015 to 129.587 in 2019 (Badan Pusat Statistik Provinsi Sulawesi Utara, 2020).
The increase of tourist number has a good impact on the economy. Various kind of businesses to support the need of the tourists started appearing and growing. This also generated new business ideas to the locals. As tourists from China do not have specific interest in underwater activities like the characteristic of international visitors in the previous years, the travel agencies had to figure new kind of attractions or activities for them, that mostly exploring the land areas and culinary. It gave new idea of cycling tour through the mountain areas which become popular to tourists from Europe.
The combination of utilization of the flower festival's momentum, maintenance of marine and eco-tourism that have been around the longest in the province, the capability of recognizing opportunity to introduce the region to other countries and find the place to start with, the quick adaptability of the locals to see business opportunities to cater the needs of the visitors, and the competence to see the potential of parts of the regions that can still be used, certainly helped the development of the region. It has a good future for further development, which is not only in the tourism industry, but also other major sectors that got affected due to the growing tourism sector.
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businesses are facing while the pandemic is ongoing, what kind of risks they had prepared for, how they are coping with the situation, and what their future plans.
1.3 Research Purpose and Research Question
This research has the objective to identify the impact of a crisis, in this case COVID-19 pandemic, on local entrepreneurs in the tourism industry in North Sulawesi province in Indonesia, as an area that has been developing its tourism industry, and has large numbers of tourists from China and South Korea. The research has the purpose to examine the operation of local businesses in the tourism industry in a developing destination during crisis time through the case of COVID-19 pandemic in North Sulawesi, Indonesia. The examination result will be used to assess the impact of a crisis on the Service Management System (SMS).
Thus, the research questions that will be attempted to answer through this research is as follows.
1. What is the impact of COVID-19 pandemic on local businesses in the tourism industry in North Sulawesi, Indonesia?
2. How does the crisis impact businesses with different characteristics? 3. What are the plans that business owners have to counter the situation?
Expected results from the research are as follows.
1. The COVID-19 pandemic, as a major crisis, has a tendency to give negative impact on local businesses operational in the tourism industry in North Sulawesi, Indonesia, which is a developing destination.
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2 Theoretical Framework
2.1 Entrepreneurship
Entrepreneurship is about having idea, seeing opportunity and start what one has in hand. Many things can happen along the way of realizing the idea, that will need modification and adaptation. Eventually, when things go well, the idea of an entrepreneur can grow into a structured business organization. There is a lot of process to go through that can involve several theories and methods such as effectuation method, Value Proposition Canvas (VPC), Business Model Canvas (BMC) and Service Management System (SMS).
According to Read, et al. (2017), entrepreneurship often uses the effectuation principles in building business, where its principles encourage people to start with their means, to leverage what they already have to take action. It also mentions about understanding the risk and downside of the action, which translates into affordable loss that the entrepreneur can take. The third principle is to be ready with any uncertainties and be flexible so that entrepreneurs can keep going by embracing the surprises. So far, the three principles are more related to how the entrepreneurs should act, without really considering the people whom they will work with, which should be equally important, because the fourth principle talks about forming partnership. When the business starts expanding, it is only natural that it will hire more employees, then reach out to more partners and customers. This brings more responsibility as the entrepreneurs should start considering all the related parties in its business contingency plan.
Fig. 3 The Value Proposition Canvas (VPC) Tool (Osterwalder, et al., 2015)
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Fig. 4 The Business Model Canvas (BMC) (Osterwalder, et al., 2010)
The BMC tool (Fig. 4) shows how important the partners and customers are, as they relate to the idea brought by the entrepreneurs through the effectuation principle. The key partners help the business providing the products and service and the distribution, which at the end will be consumed by the customers, that will bring revenue to the company (Osterwalder, et al., 2015). The sales channel is a combination of direct sales (own sales) and sales through others. This will directly affect the selection of key partners (e.g. landlords and suppliers), key activities (marketing, sales, service) and key resources (staffs). There are also two other significant parts of business that BMC covers, which are cost structure and revenue stream. Cost is related to partners and resources. Defining all the required partners and resources create a detailed cost list. On the other hand, revenue is associated to customer, because earnings are gained from customer payment traditionally. The revenue stream is used to find possible revenue sources. Upon collecting information and having details of cost and revenue, reviews can be conducted to know how much sales should the company make to gain proper revenue to cover all the costs and make profit.
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and news, and observing the social media can provide information regarding the peak and low season, how much possible customers can be acquired, and the acceptable rates in the market. This information will determine the sales target which will be used to calculate the profit.
Fig. 5 VPC and BMC in SMS model
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customer segment to deliver its service. The SMS as a whole mode is a way to describe service organizations, where usually an idea from entrepreneur in the effectuation process will lead to eventually. It is interesting that the culture and philosophy is placed in the middle of SMS model showing how it relates to the other four components. It means that the culture and philosophy, as the core of the company, influence all the other four components, so it drives how the organization will work and where it is going.
If we look back at the first step of effectuation process, there is no mention about having core value of the company that need to be considered when taking action to start a business. However, it is important to have a core value that drives the entrepreneurs and help the decision making upon which action to take, what kind of situation that they should leverage upon, and whom they should partner with. Along the way of business development, the business will evolve whenever it encounters challenges, new opportunities, expansion and many other things. It is important for the owners or entrepreneurs who started the business to reflect upon its initial core value before making the changes. Eventually, this core value will develop as the culture and philosophy of the company.
In the current era, for the tourism industry to be able to give more contributions to UN's SDG, it is important for every entrepreneur in the industry to have sustainability as its core value and aim to help the causes supported by UN's SDG. For example, the company should consider the customers, partners, and especially employees on their contingency plan should any crisis happen and put the business on hold, similar to the condition the world is facing currently with the COVID-19 pandemic.
2.2 The Impact of COVID-19 Pandemic on The Tourism Industry
A disease outbreak, that later known as COVID-19 started in December 2019 and spreading to the world within less than three months, and was declared as pandemic on March 11th, 2020 (World Health Organization, 2020). Even though an emergency protocol was done in January 23rd, 2020 to prevent further infection, the disease was pervasive as a new strain
virus that some cases of infected people show only mild symptoms or even asymptomatic. The ease of travel and the capability of people to move between countries also helped spreading the infection.
Countries started taking measures, some of them started doing it even before WHO declared the outbreak as pandemic, by closing its borders to reduce the infection rate and protect its residents. Some countries even decided to make people stay at home to limit contacts with others. At the community level, it causes employees to work from home, slow down the economy, and at some point, caused panic to people that they started hoarding things that disrupt the supply and distribution. At larger scale, a lot of industries are being hit hard with the actions taken, including the tourism industry.
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tourism industry can be affected by the COVID-19 pandemic, where Asia is expected to have the worst impact. WEF predicts that it could take the business as long as ten months to recover even after the pandemic is over. This should have taken into consideration as travel industry records for 10.4% of worldwide GDP, supports around 319 million jobs, which is about 10% of global employment (World Travel & Tourism Council, 2019).
UNWTO (2020) made initial assessment to potential economic impact by comparing the SARS outbreak of 2003 as benchmark and come to several conclusions. It predicts that there will be a decrease of 1% to 3% in international visitor arrivals worldwide in 2020, which is down from a 3% to 4% expected growth in the beginning of January 2020. It equals to a loss of USD 30 to 50 billion in expenditure of international visitors. Up until this point, UNWTO predicts that Asia Pacific region will be affected the most where they can face a 9% to 12% decline in tourist arrivals, which is down from 5% to 6% expected growth as forecasted in early January 2020. Another reason why the tourism industry will need time to recover is because it is 80% comprised by small and medium sized enterprises, which will be impacted in particular. This may impact people that highly dependent on tourism as their main income.
Indonesia, as one of the countries in Asia Pacific region, will also have the impact. The government decided to increase the foreign exchange through the tourism industry, because of the increasing trend it has been showing since 2015. The foreign exchange in the tourism industry in Indonesia in 2018 was up to USD 16.426 million (Badan Pusat Statistik, 2020a; Badan Pusat Statistik, 2020b), which is the fourth biggest foreign exchange income in Indonesia. The country targets to make the tourism industry as the biggest foreign exchange and tries to develop all the infrastructure and supporting system in order to attract more foreign tourists. The country managed to create more job employment in the industry. However, the COVID-19 pandemic is halting the development of the tourism industry in the country. It may also be possible that it endangers the economic and community stability, as several places in Indonesia have large portion of income through tourism sector. One of the destinations is North Sulawesi province, that most of its foreign visitors are from China and South Korea, where the COVID-19 had its early outbreak in.
We have seen how the pandemic impacted the tourism and travel industry so far. An analysis resulted in 25 million jobs are in danger because of the airline shutdown (IATA, 2020). This report by IATA also mentioned that the most endangered jobs are in Asia-Pacific which is approximately 11.2 million. Fig. 6 shows how much less the air traffic has become by the end of March 2020 compared to the previous year. The recovery of international trade, supply chains, investment and tourism are relying on the connection of cities through air transportation. This is particularly critical to countries with emerging economies. The problem with the airlines industry definitely has an impact on the tourism industry as most travelers now fly to many tourist destinations due to its convenience. A lot of remote destinations also depends on air transport to give the visitors access there.
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It was quarantined at Yokohama since early February 2020 for almost one month when all the passengers and crews left the ship on March 1st, 2020 (News24, 2020). It was still on the early
stage of COVID-19 pandemic when the first case was identified in Diamond Princess, so the quarantine was a measure taken to prevent the disease to spread further, though it became a debate that it took a long time until all the passengers and crews were released from the ship, and ended up infecting many people in the ship. After that, many cruise ships started reporting cases, that triggered responses from public health and port authorities in many countries. The responses include travel restriction to passengers and crews of the ships, ship movement restriction, and disinfection of cabins among other things (CDC, 2020a). Then, CDC issued No Sail Order to cruise ships on March 14th, 2020, which was extended on April 9th, 2020 (CDC,
2020b). This action, despite logically in line with other efforts to limit the transmission, has caused a concern that the cruise industry is being singled out inconsequently despite its best proactive effort to follow the health and sanitation protocol and claimed to be one of the pioneers to voluntary suspend the operation (CLIA, 2020).
Fig. 6 Air Traffic Comparison Between End of March 2019 and 2020 (Pearce, 2020)
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2.3 Past Crisis, Emergency Management and Resiliency in The Tourism
Industry
Several epidemics and pandemics have happened in the past twenty years, such as SARS, MERS and H1N1, that they had impacted the economic sector, and more specifically the tourism industry. Mexico lost almost one million foreign visitors after 2009 H1N1 pandemic (Rassy & Smith, 2013), Republic of Korea had a decrease of 2.1 million non-citizen visitors (Joo, et al., 2019), and SARS made China and Malaysia lost around USD 3.5 billion and USD 1.7 billion respectively in domestic tourism (Keogh-Brown & Smith, 2008). The government in China even closed some of tourist attractions in some regions because they had poor epidemic control, that resulting in businesses that dependent on those tourist attractions closed (Zeng, et al., 2005).
Seeing how fragile the tourism industry due to its dependency on various things to run, prone to numerous types of crisis, rapidly changing, and being a tertiary sector that it develops well due to higher disposable income then become one of the drivers of world economy nowadays (von Bergner & Lohmann, 2014), it is important to assess the risk that the companies in the tourism industry may face. Different countries are posed to different kinds of risks and has different levels of resiliency. How every country cope with different types of threats in the industry is also different.
A study by Fuchs, et al. (2013) was designed to find what the Israeli tourists thought when they visited Sinai, a destination with a risk of having terror attack and security issues. The study found out that the security issue was not the only risk. They also acknowledged other concerns that make up the variables of their decision upon visiting such destination. Furthermore, it found that tourists will still find reasons to visit the destination despite the risk. How the tourists came to a decision was influenced by their political standpoint in that specific study, showing that the tourists' background will also have part in decision making. Another study by Saha & Yap (2014) showed that the tourism industry is impacted differently by political instability and terrorist threat depending on the political situation level. The study concluded that countries should be paying more attention and make effort to have a stable political situation if they want to utilize the tourism industry to contribute to a better economy to their countries.
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will be impacted by the disaster or they have enough information about the destination to contemplate with (Huan, et al., 2004).
Understanding how fragile the tourism industry due to these risks, meaning that having a good mitigation plan is essential, especially because it concerns the lives of people who are not accustomed to the situation of the destination, and the businesses supporting the tourism industry that covers the not only the owners and investors, but also the employees that are most likely locals. A study by Morakabati, et al. (2017) conducted a survey to find where the responsibilities lay to do certain actions when crisis hit. It limited the responsibility holders to three different groups that are (1) private sector responsibility only, (2) shared responsibility, to varying degrees, and (3) public sector responsibility only. The respondents of the survey were from developing countries, developed countries, and small island developing states (SIDS). The study result shows that respondents from developing countries expected more responsibilities from the public sector. However, majority of the respondents thought that it is also necessary to utilize the resources of the travel and tourism businesses to be effective in giving responses to crisis. The study also concluded that in emergency management, to know the effect of an event, one must know the cause. Destinations, even from different countries, can learn from past crises, recognize the main challenges, then adapt to their own situations.
A guidelines on how to approach crisis management that can be implemented in various destinations, especially to the impacted business, was derived based on a study of management of crisis and recovery in Israeli's tourism industry (Mansfeld, 1999). The guidelines stated that crisis management must be seen as a process, where consideration of past and current trends is necessary for future crisis-management planning. All involved parties must cooperate well and have good coordination. The domestic market should be assessed to see whether it can be utilized as an alternative, especially to destinations that rely heavily on international visitors. Marketing is also important, as it must be dynamic and innovative, but it should be sensitive to the crisis. There are also guidelines that can only be carried out by the government such as, collaboration between countries to make sure there will be good flow of knowledge, expertise and information. However, this should not be understood as something that is not related to businesses that are spread in regions. How a country receives a status and will be taken seriously in such cooperation depends on how the businesses that support the tourism industry act upon the crisis. Therefore, it is beneficial to find out what kind of issues the businesses have and what they do to strive.
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sign of COVID-19 pandemic due to their experiences with SARS in 2003. The previous crises also proved how resilience the tourism industry is. Some of the factors that help the industry bounce back after crises are the government effort to market the destination, leveraging the potential yet forgotten market, the attractiveness of the destination itself, and the visitors themselves. Some visitors still even visited destinations where crises were happening, in spite of travel warning, while rationalizing their decisions (Fuchs, et al., 2013). So, if destinations can maintain its attraction and the government is capable of assuring the safety of the visitors, then it is already a good start in helping the destination to recover.
One possible problem that may occur due to the scale of the COVID-19 pandemic is how long it will take for the industry to recover. Despite the difference nature of crisis, the COVID-19 pandemic has the same characteristic as the 9/11 terror attack in 2001. USA started imposing stricter border control after that event, which makes it harder for people to travel there. The same thing happened with the COVID-19 pandemic that numerous countries close their borders that make people unable to travel freely anymore, which may have worse impact than the 2001 event. Countries will have to reassess their policies in issuing visiting permit that will impact the operation of transportation companies, which is a backbone of the tourism industry, that connects tourists and the destinations. The longer the recovery time takes, the harder the businesses in tourist destinations to survive. As it is already learned that the tourism industry is quite resilient from the point of view of visitors and destinations, it is yet to be proved about the resiliency of the business within the industry itself. Despite the theories and guidelines of the mitigation plans, it needs to be proved whether all the plans work, to what extent the plans cover the disruption in actual crisis, and how companies actually execute those plans. As emergency management is a complex system, that different countries and companies may have different solutions, the uncertain nature of the problems, the contingency plan should be flexible (Morakabati, et al., 2017), so it is important to have specific study in destinations that display unique characteristic.
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3 Methodology
3.1 Research Strategy
This research will use a mixed of quantitative and qualitative research through surveys that is aimed to businesses in the tourism industry in North Sulawesi province, Indonesia. This method is chosen because it is considered useful in social research in which ethnography is usually the popular method to use (Bryman, 2012). The research has the purpose to measure a crisis impact through a business model, which is not quantifiable, unlike measuring the impact economically by looking at loss in terms of financial and decreasing job numbers. However, due to the unique crisis situation, the researcher aims to reach as many respondents as possible to get broad understanding of the whole tourism industry situation from the perspective of the companies. Quantification also helps in sorting fact and improve the validity of qualitative research, especially in this particular case it can obtain a sense of the variance in the data (Silverman, 2013). Therefore, surveys, which is usually used for quantitative research, is the tool chosen for data collection.
The sample group will include representatives of local businesses in the tourism industry, where the initial main targets are accommodation providers, diving resorts and travel agents. The qualifying criteria required for inclusion in the survey will be that the company must operate in the tourism industry within the area of North Sulawesi province. Target group was sent online survey through email. First stage is to build survey questions based on initial research purpose and research questions. Second stage is to set online platform for the survey, then send the survey link to the respondents. Respondents will be asked their willingness for further interview should it be necessary. Third stage will consist of analysis process of result in second stage, then decide whether further interview is needed. Other methods will also be done during all three stages including observation, collection of data via digital images, video and news. Questions in the survey also contains elements that can be used in comparative study, which is useful in contrasting two cases (Bryman, 2012) by looking at opinions of different types of business. Participation in this research presents no potential risks to the participants. All respondents were assured that their names and their organizations will not be divulged in subsequent write ups and material submitted for publication.
3.2 Literary Sources
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3.3 Empirical Material & Data Collection
The research will do mixed method analysis where the data will be gathered quantitatively through online survey, where all the questions were constructed based on previous research related to crisis management in the tourism industry and the news reporting updates of pandemic situation. The survey questions were built to find what problems the businesses are facing, and what plan they currently have for the future. It also had questions that can find the background character of every company by looking at size, how long it has been around, and its visitors' origin. The respondents were also asked about the sustainability aspect of their companies to find the base on how much they value sustainability and incorporate it in the company culture. This has the purpose to define the interview questions for the next stage should it be needed. Quantitative method is chosen due to its attribute of giving interpretivist stance (Bryman, 2012) that can help in understanding the tourism industry situation in North Sulawesi in COVID-19 pandemic situation.
The next approach is doing observational study by looking at information provided by the companies in their websites. The objective of doing observation is to find which respondents had explicitly mentioned about sustainability related projects or how they are handling the COVID-19 pandemic situation. This will set the basis on how to categorize the respondents for further analysis or interview should it be needed.
3.4 Questionnaire Guide
The questionnaire consists of six parts (see Appendix 1). Part one contains questions related to the background characteristic of the company. Part two is used to find out the characteristics of the visitors. Part three contains questions related to the impact of the pandemic on the businesses. Part four has the purpose to find out the opinions of the companies towards contingency plan, how long they have been impacted by the pandemic, and how long they think they can survive. Part five will examine the understanding of the companies related to sustainability. Part six is used to gather additional comments from the respondents along with administrative information.
3.5 Analyzing the Data and Ensuring Validity
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4 Results
Online survey was sent to various businesses in the tourism industry in North Sulawesi, Indonesia, mostly to business in the area of Manado, Bunaken, Tomohon, Bitung, and Likupang. Data was collected in April 2020. The study distributed 188 questionnaires through email and messaging application. Due to time constraints and difficulties finding the valid contacts of the companies, especially with the ongoing pandemic situation, the response rate was only 20.21%. The statistical analysis was done on 38 samples collected using SPSS. The answer for Q9 (Appendix 1) is recoded to combine the options 'Before January 2020' and 'January 2020' into one option of 'Before February 2020' for analysis purpose.
The first step was to find the respondents background by doing frequency statistics in descriptive statistics analysis to questions in the Part 1 and 2 of the survey (Appendix 1). The purpose of frequency statistics is to count the number of times that each variable occurs. Respondents background information was collected to see whether different types of business (Q1, Q2), length of establishment (Q3), company size (Q5), and the position of the person who represented the company (Q4) to fill the survey will show different results. The second step was to analyze Part 3 of the questionnaire. Frequency descriptive statistics analysis was done to Q7 to see the distribution of opinion regarding the pandemic impact on all respondents. List of problems are presented in Q8 as multiple checkboxes. Therefore, the analysis was done by counting how many times each option was selected by the respondents, then it was sorted according to the percentages to see which problems stand out. The third step was to analyze Part 4 that covers the contingency plan. Information regarding how long the companies had been affected by the pandemic (Q9) and how long they thought they could survive the crisis (Q10) was collected to see whether it has impact on how the companies plan on how to survive the crisis and recover later. List of actions that are considered as part of contingency plan are presented in Q11, where each question is weighed in seven-points interval scale. Correlation analysis between Q9, Q10 and Q11 was done, however there was no correlation found. Following this, frequency descriptive statistics analysis was done to Q11 to see how important each option to the companies. The fourth step was to analyze Part 5 that has the purpose to examine the sustainability aspect. The respondents were asked to grade their own understanding of sustainability in Q12, then they were presented with lists of actions that are commonly known to contribute to sustainability in Q13. Both questions are weighed in seven-points interval scale. Both frequency analysis and correlation analysis were done to Q12 and Q13.
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representative of the tourism industry in North Sulawesi as general in this research. The last question in the survey (Q17) also asked the respondents to fill additional comments. The response for Q17 was quite good and gave more explanations on how the businesses cope with current situation, how they plan for the future, and how they see things work out in the surroundings. Therefore, it was decided not to have further interview as the comment section already provided the data needed for analysis.
Observation was another research method used in this study. It was conducted by looking at the information provided by the companies in their website, and through the experience of the researcher when finding means in contacting all the companies. The observation was done by looking at the companies through search engine (Google) to find their website or social media pages. The analysis was done based on the content provided through the companies' pages.
4.1 Respondents Background
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Table 1 Main Business Types and Service Provided by the Respondents
Main Business Type Percentage Service Provided Total
Accommodation 36.84 Accommodation 20 Travel Agent/Tour Guide Adventure 31.58 Tour Guide (Land) 13 Diving (Resort & Service) 18.42 Diving Resort 10 Transportation 7.89 Travel Agent 6 Restaurant 2.63 Transport Rental 4 Souvenir Shop 2.63 Souvenir Shop 2
Other 3
Table 2 Distribution of Staff Number in Respondents' Companies
Frequency Percent Valid Percent Valid Less than 4 (Home Industry) 13 34.2 34.2
5-19 (Small-scale Industry) 19 50.0 50.0
20-99 (Medium-scale Industry) 5 13.2 13.2
More than 100 (Large-scale Industry) 1 2.6 2.6
Total 38 100.0 100.0
Table 3 Length of Respondents' Business Establishment
Frequency Percent Valid Percent Valid Before 1990 2 5.3 5.3 1990-1999 3 7.9 7.9 2000-2009 11 28.9 28.9 2010-2015 7 18.4 18.4 After 2015 15 39.5 39.5 Total 38 100.0 100.0
Table 4 Respondent's Position in the Company
Frequency Percent Valid Percent Valid Director/Manager (All Levels) 14 36.8 36.8
Owner/Co-owner/Founder 19 50.0 50.0
Staff (non-managerial) 5 13.2 13.2
Total 38 100.0 100.0
Table 5 Correlation Between Variables of Respondents' Background
Staff Number Establishment Year Pearson Correlation -.333*
Sig. (2-tailed) .041
N 38
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Table 6 Visitors' Origin
Region Country
South East Asia Indonesia
Singapore Thailand
East Asia China
Japan Oceania Australia Europe France Germany Italy Netherlands Spain Switzerland United Kingdom America USA
4.2 COVID-19 Pandemic Impact Analysis
The COVID-19 pandemic has a tendency to negatively impact the business in the tourism industry in North Sulawesi. The survey question gave score range -3 to -1 (negative) and 1 to 3 (positive) to weigh the respondent's opinions. The bigger the number shows the bigger the impact. The survey result in Table 7 showed that 78.9% of the respondents thought the pandemic had negative impact on their business, where the majority of them chose the maximum score (-3) showing how badly they were affected. Nobody chose score 0, showing that everyone thought the pandemic had impact on their business to some extent. The mean value of this result is -1.58 revealing that the pandemic has negative impact on business overall.
Table 7 Impact of COVID-19 on Business
Frequency Percent Valid Percent Valid -3 26 68.4 68.4 -2 1 2.6 2.6 -1 3 7.9 7.9 2 1 2.6 2.6 3 7 18.4 18.4 Total 38 100.0 100.0 Mean -1.58 Median -3.00
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conducted. All those who requested for financial help were the ones that stated they experienced financial disruption.
Table 8 COVID-19 Pandemic Impact on Business in North Sulawesi, Indonesia
COVID-19 Pandemic Impact on Business Percentage
Operation is being halted 73,68 Experiencing financial disruption 57,89 Less customer (trip cancellation or suspension) 50,00 Considering closing the business 26,32 Start assessing the impact on business continuity and build contingency plan 26,32 Considering alternative business or service type for the future 23,68 Requested financial help 21,05 Problem with supply chain 5,26 Received financial help 0,00
Other 2,63
Table 9 Correlation of Company's Background to COVID-19 Pandemic Impact
The first time the business felt the impact of COVID-19 pandemic
How long the business can survive Establishment Year Pearson Correlation .052 -.006 Sig. (2-tailed) .757 .973 N 38 38
Staff Number Pearson Correlation .108 -.050
Sig. (2-tailed) .517 .766
N 38 38
*. Correlation is significant at the 0.05 level (2-tailed).
Table 10 Companies Opinion on Their Survival Periode
Frequency Percent Valid Percent Valid Less than 6 months 25 65.8 65.8
6-11 months 10 26.3 26.3
1-2 years 2 5.3 5.3
More than 5 years 1 2.6 2.6
Total 38 100.0 100.0
Table 11 The First Time the Businesses Felt the Impact of COVID-19 Pandemic
Frequency Percent Valid Percent Valid Before February 2020 12 31.6 31.6
February 2020 11 28.9 28.9
March 2020 12 31.6 31.6
After March 2020 3 7.9 7.9
Total 38 100.0 100.0
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displayed in Table 9, shows that there is no significant correlation between the variables, meaning that how long the company has been around and how big the company size based on its employee numbers do not affect how early the company felt the impact of the pandemic nor the company's capability to survive the pandemic. It can also be seen in Table 10 that 92.1% of the respondents think that their companies will not last more than one year should the condition stay the same, regardless of the company background. As for the when the respondents thought that their businesses were impacted by the pandemic vary a lot (Table 11). However, 92.1% of the respondents already felt the impact before April 2020.
4.3 Contingency Plan and Sustainability Analysis
The survey had questions to examine what kind of actions the companies consider important to survive the crisis and recover later in Q11. The answer is designed as seven-points interval scale with -3 (not important/not considered) as minimum value and +3 (important/considered) as maximum value. Therefore, all options that resulted in mean greater than 2 (𝑚𝑒𝑎𝑛 > 2) are considered as the most important things to do. The most important thing to do is to reduce operational cost, which is closely related to the second most important action that the respondents think they should save money from profit as internal emergency fund (Table 12). The respondents also think that they should keep updating themselves with news related to where their visitors are from and to have good communication with partners, collaborators, and suppliers. Having insurance is considered not important.
Table 12 Actions for Contingency Plan
Action N Mean Median Std.
Deviation
Min Max Valid Missing
Reduce operational cost when the pandemic is ongoing
38 0 2,53 3,00 1,310 -3 3
Save money from profit as internal emergency fund
38 0 2,26 3,00 1,369 -3 3
Keep being updated with the latest news related to areas where your visitors are from
38 0 2,18 3,00 1,291 -2 3
Good communication with partners, collaborators, and suppliers
38 0 2,05 3,00 1,723 -3 3
Encourage customers to reschedule their trip not to cancel it
38 0 1,82 3,00 1,887 -3 3
Reduce employee's salary 38 0 1,74 3,00 1,899 -3 3
Cooperation with non-governmental organizations
38 0 1,47 2,00 1,812 -3 3
Cooperation with government 38 0 1,37 2,00 1,852 -3 3
Reduce employee number 38 0 1,34 3,00 2,172 -3 3
Provide discount for limited time after the crisis is over
38 0 0,42 0,00 2,075 -3 3
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Fig. 7 Knowledge About Sustainability
Based on the result in Fig. 7 there is 71% of the respondents said that they have knowledge about sustainability to some extent in Q12, where 48% of these respondents stated that they understood a lot. Only 13.2% was not sure about their understanding by choosing the neutral middle option, and 15.8% thought they did not have knowledge about sustainability. Correlation between the knowledge of sustainability (Q12) and how the companies implement sustainability related actions (Q13) was analysed. The result shows that there is no correlation except for the option of 'collaborate with other organizations for sustainability project (Q13, option 5)' (Table 13). It was further analysed by looking into the details of Q13's result, and it was found that more than 50% of the respondents always did all the options in Q13, except option 5 (Fig. 8). It shows that the respondents already did things that contribute to sustainability that is commonly known regardless of their understanding of sustainability.
Table 13 Correlation Between Sustainability Knowledge and Implementation
Action Pearson
Correlation
Sig. (2-tailed) N
Employ local people -0,175 0,294 38
Use the service of local supplier 0,072 0,667 38
Minimize the business impact on the environment
0,007 0,968 38
Raise awareness of sustainability to visitors, employees and locals
0,011 0,947 38
Collaborate with other organizations for sustainability project
.454** 0,004 38
Encourage employee's skill development
-0,192 0,249 38 **. Correlation is significant at the 0.01 level (2-tailed).
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Fig. 8 Respondents Opinions Towards Sustainability Implementation
4.4 Additional Comments
The survey provided space for respondents to give their thoughts related to the pandemic in Q17. Several different concerns were expressed by the respondents. There are several comments from respondents who ran transport rental business. One respondent who wrote that the pandemic affected them as ninety percent of their customers were from out of Manado who travelled there either for business or leisure purposes. The company could still cover the expenses, such as paying the debt, until two months from the time the survey was done. Should the condition does not return to normal within two months, they had planned to sell some of the assets, such as cars, to keep the business to survive. Second respondent who also ran a transport rental company wrote that their current priority is to think of ways to pay their employees and fulfil their daily needs for the next few months. Third respondent wrote that they try to keep the business operating by giving heavy discounts to locals to get profit even in a very reduced amount.
Other respondents mostly expressed their hopes that the pandemic to be over as soon as possible, and how they would extremely appreciate any feedback and assistance to help them go through the crisis. Some showed how they were worried that it is going to be hard to recover, as the level of the impact was too large. It affected not only the business operation, but also the people and environment related to it. A respondent even wrote that the tourism industry situation in the destination is hard to measure.
The last comment that was written by two respondents, was how they wish the government, especially the provincial government, can give assistance during this very crucial time. One of the respondents explicitly mentioned their concern about how the locals were trashing the coral reef to search for food because they used destructive practices. The
0 10 20 30 40 -3 (Never) -2 -1 0 1 2 3 (Always)
Employ local people
Use the service of local supplier
Minimize the business impact to the environment
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respondent argued that the government should also pay attention to this issue, to send out patrols to educate the locals to be more sustainable in their practice.
4.5 Observation Result
The respondents of this research were found through search engine by looking at businesses in North Sulawesi area, initially in the Manado area, then it was expanded to Bunaken, Likupang and Tomohon areas. The initial target was accommodations and travel agents in Manado area. However, it was soon discovered that not many accommodation providers had websites, social media account or email address published online, and even less for travel agents. In an attempt to reach more respondents, the target was expanded to cover more types of business. Diving resorts is the business type that mostly have websites and publish their emails online. Transport rental companies also have websites and phone numbers published online. Respondents that could not be reached through email were contacted through social media and messaging application (WhatsApp). Plenty of invalid email addresses and phone numbers were found when sending invitation to the potential respondents to participate in the survey.
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5 Discussion & Conclusion
5.1 Business Characteristics
The purpose of this research is to find the problems in a developing tourist destination when a crisis happens. A developing destination, in this case is the North Sulawesi province in Indonesia, is chosen because there is so much room for growth that usually triggers new actors in business as demand and opportunity increase. This situation provides opportunities for entrepreneurship to grow. It is proved by the number of respondents that 57.9% of the respondents started their businesses after 2010, and another 28.9% of the respondents started within the year 2000 until 2009 (Table 3). Entrepreneurs usually start their company small, which by industry size standard in Indonesia will be home industry or small-scale industry. It is in line with the correlation analysis result of establishment year and employee number in Table 5. Out of all the respondents that started their businesses from the year 2000, 33.3% is categorized as home industry and 54.5% is categorized as small-scale business.
Looking further into each type of business, there are six different types of business represented by the survey respondents. They are accommodation provider, diving resort and service, restaurant, souvenir shops, transport rental, and travel agent or tour guiding service (Table 1). Money changer service provider was also planned to be examined, however no response was received from this business type. Restaurant and souvenir shops have low response numbers, therefore both business types cannot be analyzed in details. Looking into details of different business types shows the growth of interest upon establishing business in North Sulawesi since the year 2000. All diving resorts fall into small and medium-scale industry categories, where 77.8% were established within the year 2000 until 2009. No business that provide tour guiding services is categorized in large-scale business, where 76.9% of them are either home or small-scale industry, and also 76.9% of the respondents mentioned that they were established after the year 2000. All transport rental companies were established after the year 2015 and are classified as home industry. Respondents that represented accommodation providers are 69.2% categorized as small-scale industry, that 53.8% were established after the year 2015 and 38.5% were established within the year 2000 until 2015. Most of the respondents of this business type are from non-classified hotels category.
It can be seen that diving resort and tour guiding businesses started growing after the year 2000, whereas the transport rental companies and non-classified hotels began to increase in numbers since 2015. This is in line with the increasing number of international visitors starting in 2016 as shown in Fig. 2. The growth of visitor numbers triggers more demand that creates more opportunities to start businesses.
5.2 Problems During Crisis
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industry has been changed as well (Hall, 2010). Since the noticeable growth of tourism industry, several crises have happened including, but not limited to, the global economic crisis, natural disaster and political situation in some areas that affect its security. These crises lasted for varying period of time with varying degree of impact. However, these crises did not affect the capability to travel. It had impact on travelers' decision on how they want to travel, or whether they should travel or not. The COVID-19 pandemic that has been happening since December 2019, and spread to the rest of the world, took that mobility capability as countries close their borders preventing non-essential travels. Past experiences show that people will adapt their way of travelling when crisis happens depending on the type of crisis, either by spending less, visit other areas that were not impacted by crisis or travel domestically. This option is non-existent in time of COVID-19 pandemic. Hence, the industry finds itself not to be able to run as there is no demand.
Based on the survey result, the biggest issue that the respondents were facing is that the operation is halted. It goes hand in hand with another issue that there was less customer due to trip cancellation or suspension. This leads to financial disruption which is also another issue that the respondents mentioned. These three issues were chosen by at least half of the respondents and are the top three of all the issues mentioned (Table 8). This actually makes sense because all these three options usually happen in the early stage of crisis. According to a white paper released by Everbridge, there are six phases within every crisis: (1) Warning; (2) Risk Assessment; (3) Response; (4) Management; (5) Resolution; and (6) Recovery (Chandler, 2013). Through observation and survey result, as the pandemic was still ongoing when the research was conducted, the crisis can be considered to be on the third stage at most to the respondents. Similar to the stages that are suggested by Chandler (2013), the three stages that the respondents have been through are (1) trigger, (2) reaction and (3) response (Table 14). Stage one is the trigger when businesses started getting or feeling the impact of the crisis. It is an external factor from business's point of view, something that cannot be controlled but can affect the business operation. Stage two is when the business started acknowledging the impact and reacting to it, usually by assessing the damage that the business had so far. Stage three is when the business determines what actions should be taken upon assessment result. It is the response to what the crisis has brought to the business. The decision may vary depending on the business characteristics. This stages classification is in line with the survey result of Q8. The options that are classified in stage one was chosen the most, the options in stage two was chosen the second most, and the options in stage three was chosen the least. This is caused by the varying time when each business had or felt the impact for the first time, as can be seen in Table 11. Every business will pass the first stage before going to the next stage. When they entered the initial stage in different time, it will lead to variation on which stage each business is in certain period of the crisis, where the further the stage is the less the business there.
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crisis was too big, that the companies could not deliver its service, then they did not need any supply, hence the supply chain problem was not recognized by the companies.
Table 14 Crisis Stage
Stage Description Rank in Survey
Trigger (1) • Less customer • Operation is halted • Financial disruption
3 1 2 Reaction (2) • Impact assessment 4/5* Response (3) • Consider to close the business
• Consider to have alternative business in the future • Request financial help
4/5* 6 7 * Both options have the same percentage in the survey result
5.3 Crisis Impact to Business Model
Entrepreneurship is a process that utilize things in hand to create or discover something new that usually will be nurtured into a company. Effectuation method and VPC (Fig. 3) are the common tools that help the initial stage of entrepreneurship to help defining product or service that will be served to the market along with the characteristics of the customer that will be targeted. When the company begins, it will have to start creating relationships with vendors and customers, as depicted in BMC (Fig. 4). VPC and BMC altogether help building a company to deliver its product or service to the customers. As the tourism industry revolves around the service industry, which is represented by the respondents of this research, the implemented VPC and BMC will be incorporated in a service industry model, such as SMS (Fig. 5). Seeing how the models intertwine each other, it can be said that a disruption in one part can affect the other parts as well. The disruption can be caused by many things, one of them is a crisis. COVID-19 pandemic is considered a crisis that has a huge impact across different industries worldwide, including the tourism industry that fifty million jobs has a risk of being affected (World Economic Forum, 2020). How these jobs can be affected can be seen by looking at the companies in the tourism industry, and how each aspect of SMS within the companies have been affected by the pandemic.
5.3.1 The Service Concept
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not only provide services to visitors but also to locals, can find themselves in a pinch when being put in a major crisis like COVID-19 pandemic. The social distancing policy and recommendation to stay at home by a lot of countries, including Indonesia, play a big role in this. Different kinds of crisis may impact differently to every service provider. In a different crisis situation, for example where the locals still can do their activities normally even though the number of visitors decline, some businesses can still run.
5.3.2 The Market
The market in SMS is also translated as the customer segment in BMC or customer profile in VPC. This is related closely to the service concept, as both aspects are the base of VPC. The service provided by the tourism industry usually have specific customer target that are visitors. Most of the survey respondents provide service to foreign visitors mostly. Based on observation, some travel agents in North Sulawesi even focus on tourists from certain region or country, for example China. COVID-19 pandemic hit China earliest, since December 2019, and spread to the whole country, that by February 2020 all the chartered flights from China to Manado, the capital of North Sulawesi, was closed. It stopped the operation of the companies that focused only on visitors from China. Other businesses were still running until the time the Indonesian government started imposing border control and did not grant permit for non-essential travelling.
In other situation, where businesses whose target market are foreign visitors have problems with their customer number, there is a workaround by expanding the target market to domestic visitors. It usually can be done because Indonesia is huge in terms of area and population size, and people who live in the western part of Indonesia, including the capital Jakarta, think that the eastern part of Indonesia also offer the exotic experience due to the stunning untouched nature. Besides that, the living standards in most part of western Indonesia is higher than North Sulawesi, so the service cost can be considered affordable. However, the social distancing policy makes people unable to travel domestically, so the businesses cannot find workaround regarding target market.
5.3.3 The Delivery System
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not find the issue with supply chain to be an issue, because they already had problem with their business operation, that most of their operation were stopped so they could not even deliver their services. Hence, they did not need vendor to give them supplies as they did not need to produce any service. The problem lies within the key resources. The obvious thing is the missing of the client, which is related to the market and service concept. The employees were also hit hard as they had the risk of losing job or not getting paid due to the business could not run. According to Table 12 the respondents consider reducing employees' salary or number of staffs as part of contingency plan. It can help the company reduce operational cost, which is the most important thing to do according to the respondents in order to survive the crisis.
The delivery system is important but also fragile. The success of the company to carry a good delivery system will benefit not only the company itself, but also everyone related to the company, that are the employees, the clients and the vendors. A good relation with all the key resources and key partners can help the company to grow further. It will also build the company image.
5.3.4 The Image
The image is regarded as a tool of communication by the company to present itself to everyone, including the employees, owners, management, clients and partners, that have influence in positioning the company in the market (Normann, 2002). In a more simplified words, sometimes it is called branding. However, branding is usually leveraged as means for marketing, that most likely affected the customers' perception. Whereas, the image covers the whole aspect of the company.
This aspect of SMS is affected differently compared to other aspects in times of crisis. The three aspects that have been explained previously will tend to be affected negatively when a crisis happens. Those aspects will not be able to dodge the impact and can only find workaround to survive the crisis. On the other hand, crisis can be used as a leverage to improve the company image if used wisely, especially a crisis with large impact like COVID-19 pandemic. Companies will struggle to survive and will try their best to stay in the business by cutting the cost as much as possible. One of the options is by reducing employees' salary or even reducing the number of staffs. This usually hits companies with large number of employees. When it is necessary to take such measures, it is important for the company to convey the message carefully, to make the employees understand why such decision is needed. It should be delivered so the employees do not lose trust in the employer. It should also pay attention on how the public will view the action. Therefore, it is crucial to have good reasoning upon taking such action. For smaller companies that have no issue with keeping their employees can boast about it and build good image by advertising their capability in keeping their employees and help the employees go through hard time together.
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good relationship with the customer (see Appendix 3). In crisis time, it is even more important to have good communication with the customers. Companies experienced booking and trip cancellation that definitely disturbed the finance. Some companies use the strategy of offering the customers to reschedule their trip instead of cancelling to overcome the issue. This is good for the financial aspect, and also to spread positivity within the customers that they can look forward to their trip when things get better. Some other companies also provided information related to crisis in their website (see Appendix 3). This is important, because even though the government also publishes the information, it is easier for the customers to find it through the more familiar websites where they have booked their trips with.
5.3.5 The Culture and Philosophy
Normann (2002) mentioned that culture is the basic value that direct human behaviors to some extent in order to achieve a common accepted state. It is an important management tool in service organizations. It can be identified in organizations through the language used, what is valued and rewarded, recruitment and human-resource development, guidelines for business development, and many other things that happen around the organization. Fig. 1 shows that culture and philosophy is positioned in the middle of SMS model and connected to the other four aspects. It drives the decision that help the other aspects work. Therefore, in time of crisis, culture and philosophy is the only aspect that is not affected. On the other hand, it is the one driving all the decisions to counter the disruptions within the other aspects.
For example, when a company decides to reduce costs to survive to crisis, it will consider different cost variables to make decision. How the company values things internally will affect the decision. Companies that have to reduce its employee numbers will look at the employee performance review upon decision making. Companies that have to reduce the employees' salary will create different pay cut scenarios for different positions. Companies that request for financial help display their desire to survive and keep running. Companies that consider selling their assets to pay for the operation costs show that they want to be able to run the companies as long as possible and be responsible to their employees.
