ASIAN CRISIS AND TOURISM IN SINGAPORE : AN OVERVIEW

Abstract

Tourism has come a long way since the time of the Sumerians and other ancient people who first began to travel for trade purposes. It has since been a medium for the facilitation of international understanding, goodwill and trade, as well as the transmission and advancement of knowledge and learning. Today, it is a fast growing global industry. World Travel and Tourism Council (WTTC) has called it the world's largest industry and generator of jobs. "Travel and tourism is the world's largest industry today accounting for more than 6% of GDP, 1 in every 15 workers, 7% of capital investment and 13% of consumer spending worldwide. We forecast that Travel and Tourism's contribution to the global GDP will grow by more than 100% in the period leading up to 2005, that capital investment will grow by 80% and that employment generated will rise by 33%. This last figure represents some 40 million jobs or, worldwide, one new job every 10 seconds" (World Travel and Tourism Council - Progress and Priorities, 1993). Asia-Pacific region witnessed an average annual growth of 8.2% in tourist arrivals between 1990 and 1995 whereas growth in world tourist arrivals only increased at a rate of 4.7%. Northeast Asia and Southeast Asia together account for over 80% of the arrivals in the Asia-Pacific region and they have also been the areas with the most rapid hotel development. Tourism has contributed greatly to Singapore's economy and the quality of life. There has been a steady rise in the number of tourist arrivals and receipts over the past 33 years since Singapore's independence in 1965. The number of tourist arrivals in the year 1996, for instance, totalled 7,292,521 visitors - an outstanding increase from the 98,500 who came to Singapore over the same period in 1965! New York, Tokyo and London are financial capitals; Paris and Milan are fashion capitals. Likewise, Singapore strives to become a tourism capital. The Singapore Tourism Board (STB) came up with the Tourism 21 Plan with the help of more than 350 people comprising top executives from public and private sectors on 24111 July 1995. Its vision is to become a vibrant and progressive Tourism capital that retains its Asian warmth and hospitality. It will achieve this vision by enhancing Singapore's position as a tourist destination, tourism business centre and regional tourism hub. But the Asian crisis coupled with the haze from Indonesian forest fires has disrupted STB's vision. STB has revised its plan and has lowered its expectation in the short term. With the fall in arrivals from ASEAN, the highest generator of arrivals, Singapore's tourism has suffered greatly last year (1997) as well as in the first and second quarters of this year (1998). All the tourist related industries are affected by this downturn. This study is done to see the impact of the crisis on tourism in Singapore especially the impact on the three main sectors - hotel, retail and travel agency. Since the crisis is still on, the total effect cannot be determined so the effects so far on the tourist industry are explained in this thesis. Since there were not enough information on the impact of the crisis on tourism a survey was conducted. Chapter one briefly introduces the reader to the subject to be discussed. A brief account of the trends of the tourism industry along with the detailed explanation of the Tourism 21 plan is discussed in chapter two. It shows the rising importance of tourism in Singapore since 1987 until now. " Tourism in the East Asia and the Pacific region suffered its worst setback ever last year - with just one percent growth," said WTO Secretary-General Francesco Frangialli1. Singapore faced its first drop in visitor arrivals in 14 years - 17.6% drop in October 1997. Asian Crisis and haze problem are the root cause of this drop. A brief explanation of the nature of the Asian crisis and its impact on tourism in Singapore is explained in chapter three. This chapter also explains haze problem and its impact on Singapore's tourism. Chapter four explains the survey undertaken to see the impact of the crisis on the tourism industry. Based on the survey results the impact on the various sectors (hotel, retail, travel agency) in the tourism industry are explained. Possible ways of solving the negative impact of the crisis and the haze are briefly explained in chapter five. Finally, conclusion is made based on the survey results and the analysis made in previous chapters.