How terrorism tag impacts Nigeria's travel, tourism, hospitality business

WOLE SHADARE writes on the consequences of terrorism on hospitality, tourism and travel business and the impact the listing of Nigeria among terrorists countries by the U.S. is likely to have on the economy of Nigeria.

THE listing of Nigeria among terrorist groups by the United States of America may have drawn the ire of the government and other policy formulators. These policy formulators are only looking at the listing from a narrow angle of Nigerians going through strenuous security checks and the bad tag it confers on the country, they seem not to be looking at the great economic danger the situation is capable of having on tourism, travel and the hospitality business.

The tourism industry generates substantial economic benefits to both host countries and tourists' home countries. It is, especially, an important industry to developing countries.

The main benefits of tourism to a country are foreign exchange earnings, tax revenues, business opportunities for budding entrepreneurs, and employment for workers in the industry.

According to the World Tourism Organisation (WTO), "Tourism is one of the top five export categories for as many as 83 per cent of countries and is the main source of foreign exchange earnings for at least 38 per cent of countries."

Foreign exchange earnings from exports are used to purchase imports and augment reserves. They generate income in the host country and can stimulate consumer spending and investment in other sectors of the economy.

Tax receipts from tourism are both direct and indirect. Direct tax receipts are generated from the incomes earned by businesses and workers. Indirect taxes are duties levied on goods and services purchased by tourists. The World Travel and Tourism Council estimates that tax contributions related to tourism world-wide were over $800 billion in 2007.

Tourism is a monopolistically competitive industry. It has many relatively small enterprises producing slightly differentiated products and services. Barriers to entry and exit are relatively low.

For these reasons, the tourism industry provides tremendous opportunity for relatively small businesses to thrive and is a leading generator of jobs. The hotel accommodation sector alone provided around 18.3 million jobs world-wide in 2005, according to the United Nations Environmental Programme (UNEP).

Tourism generates jobs directly through hotels, restaurants, night-clubs, taxis, and souvenir sales. Indirectly, jobs are generated through the supply of goods and services required by tourism-related suppliers. The WTO estimates that tourism represents 8 per cent of jobs world-wide.

Though it is too early to assess the extent of the action of young Mutallab's to blow up an American airliner on December 25, 2009 . The coming days will define the travel and tourism industry and would foresee the ripple effects across various travel markets. There are indications of what lies ahead.

It is impossible to predict what will be the long-term implications, but one thing is for sure, during such trying times the travel and hospitality industry is especially vulnerable.

Travel experts, who spoke to The Guardian, are in agreement that the recent terrorist attempt by Umar Farouk Abdulmutallab will have at least a short-term negative impact on the travel industry.

This short-term impact may be exacerbated by psychological factors (lingering shock effects, fear of flying, uncertainty, etc), how the "war on terrorism" proceeds and how the economy performs over the next several quarters. The travel industry may recover or sink in a long-term down cycle.

Here are some of the effects of terrorist attacks on travel and hospitality, which travel suppliers and hoteliers should take into consideration when assessing the situation:

Nigeria like many economies of the world is in deep recession. The global economy was showing signs of slowing down. Economists believed that the unusually resilient consumer confidence was one of the factors that kept the Nigerian economy going even in the face of uncertainty, confusion and unpredictability.

This may be changing fast, consumer confidence most probably, will be severely damaged by the recent events.

In hospitality, before now, Nigeria 's hotel occupancy hovers between 65 per cent and 70 per cent for the big hotels, with Eko Hotel and Transcorps Hilton Hotel Abuja recording the highest occupancy rate and between 40 per cent and 50 per cent for the smaller hotel.

There are apprehension that not many would love to visit the country, especially at a time the country is unsettled, has security issues to be solved. Security has remained one of the problems affecting tourism in the country.

Inspite of the enormous fund expended by the Nigerian Tourism Development Corporation to launder the image of the country and to assure foreigners that Nigeria is indeed a safe country, not much seems to have been achieved by the group.

The issue of security came to the fore at the World Travel Market (WTM) held in London, November last year. Many, who spoke expressed their fear of visiting Nigeria following negative reports they read on the Internet on the appalling security situation in the country. Many of them even claimed ignorance of the part of the globe Nigeria is situated.

The Director-General of NTDC, Otunba Olusegun Runsewe laboured but succeeded in convincing his audience that the country was indeed very safe, with huge growth in tourism. Runsewe, however, dismissed insinuation that Nigeria was not safe.

In general, people tend to stay home where they feel most secure. People also tend to stay away from the troubled areas. In this case, the countries believed to harbour the alleged perpetrators are the areas in question.

Security concerns will top the list among the standard travel considerations, such as price, distance, convenience, duration, etc. On similar occasions in the past people have avoided for some time troubled countries, air travel, cruise ships, major sports events and theme parks, perceived as likely terrorist targets.

The fear of flying is another of the most immediate effects of the terrorist act. A number of people may avoid air travel for some time until they overcome the psychological shock of what has happened. Others may avoid flying on American carriers or staying at brand hotels, perceived as more likely targets of terrorist attacks.

The introduction of air marshals and more stringent security measures at airports will alleviate some of the security concerns. Airlines and airports can help further by promoting the new security measures that are in place.

On a positive note, Americans shocked by lapses in their security system, a development, which almost made the Nigerian to succeed in his suicide plot thrive on disasters. It is a nation of positive thinkers and forward-lookers.

The unique mentality and "can do" attitude have helped the U.S. overcome its adversities of many natural, political and economic disasters. The nation has demonstrated extraordinary resilience and determination in the aftermath of similar tragic incidents in the past, which have had a mobilising and unifying effect on the population.

While the government, opinion moulders have criticised the hasty manner the U.S. blacklisted Nigeria over the terror issue, there are a whole lot of issues to be done rather that threatening, issuing of ultimatum to the U.S. to remove Nigeria's name from the infamous list.

Nigeria should as a matter of urgency begin to solve her myriad of security, infrastructure and social problems for the U.S. to reconsider her decision about Nigeria.