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<front>
<journal-meta>
<journal-id>2222-3436</journal-id>
<journal-title><![CDATA[South African Journal of Economic and Management Sciences ]]></journal-title>
<abbrev-journal-title><![CDATA[S. Afr. j. econ. manag. sci. (Online)]]></abbrev-journal-title>
<issn>2222-3436</issn>
<publisher>
<publisher-name><![CDATA[University of Pretoria]]></publisher-name>
</publisher>
</journal-meta>
<article-meta>
<article-id>S2222-34362012000200005</article-id>
<title-group>
<article-title xml:lang="en"><![CDATA[Identifying risks facing the South African tourism industry]]></article-title>
</title-group>
<contrib-group>
<contrib contrib-type="author">
<name>
<surname><![CDATA[Shaw]]></surname>
<given-names><![CDATA[Gordon]]></given-names>
</name>
<xref ref-type="aff" rid="A01"/>
</contrib>
<contrib contrib-type="author">
<name>
<surname><![CDATA[Saayman]]></surname>
<given-names><![CDATA[Melville]]></given-names>
</name>
<xref ref-type="aff" rid="A02"/>
</contrib>
<contrib contrib-type="author">
<name>
<surname><![CDATA[Saayman]]></surname>
<given-names><![CDATA[Andrea]]></given-names>
</name>
<xref ref-type="aff" rid="A03"/>
</contrib>
</contrib-group>
<aff id="A01">
<institution><![CDATA[,University of Fort Hare Sanlam in Entrepreneurship ]]></institution>
<addr-line><![CDATA[ ]]></addr-line>
</aff>
<aff id="A02">
<institution><![CDATA[,North-West University Institute for Tourism and Leisure Studies ]]></institution>
<addr-line><![CDATA[Potchefstroom ]]></addr-line>
</aff>
<aff id="A03">
<institution><![CDATA[,North-West University School of Economics ]]></institution>
<addr-line><![CDATA[Potchefstroom ]]></addr-line>
</aff>
<pub-date pub-type="pub">
<day>00</day>
<month>00</month>
<year>2012</year>
</pub-date>
<pub-date pub-type="epub">
<day>00</day>
<month>00</month>
<year>2012</year>
</pub-date>
<volume>15</volume>
<numero>2</numero>
<fpage>190</fpage>
<lpage>206</lpage>
<copyright-statement/>
<copyright-year/>
<self-uri xlink:href="http://www.scielo.org.za/scielo.php?script=sci_arttext&amp;pid=S2222-34362012000200005&amp;lng=en&amp;nrm=iso&amp;tlng=en"></self-uri><self-uri xlink:href="http://www.scielo.org.za/scielo.php?script=sci_abstract&amp;pid=S2222-34362012000200005&amp;lng=en&amp;nrm=iso&amp;tlng=en"></self-uri><self-uri xlink:href="http://www.scielo.org.za/scielo.php?script=sci_pdf&amp;pid=S2222-34362012000200005&amp;lng=en&amp;nrm=iso&amp;tlng=en"></self-uri><abstract abstract-type="short" xml:lang="en"><p><![CDATA[Even though risks certainly influence travel and tourism patterns, very little research has been conducted into how the industry generally perceives and manages risks. This article aims to (i) identify the risks the South African tourism industry deems important; (ii) construct a matrix for assessing the various risks identified and (iii) determine whether sectors of the industry rate the importance of risks differently. In total, there were 212 responses to the questionnaire in the survey on South African tourism businesses. The statistical analysis included a factor analysis and an ANOVA (analysis of variance). Nine factors were identified and the ANOVA confirmed that sectors do perceive differing levels of importance in the various risks. The risk assessment matrix showed that internal risks are rated among the most important, even though little attention is paid to these in the literature.]]></p></abstract>
<kwd-group>
<kwd lng="en"><![CDATA[risk management]]></kwd>
<kwd lng="en"><![CDATA[factor analysis]]></kwd>
<kwd lng="en"><![CDATA[tourism management]]></kwd>
<kwd lng="en"><![CDATA[ANOVA]]></kwd>
</kwd-group>
</article-meta>
</front><body><![CDATA[ <p align="right"><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><b>ARTICLES</b></font></p>     <p>&nbsp;</p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size=" 3"><b>Identifying risks facing the South African tourism industry</b></font></p>     <p>&nbsp;</p>     <p>&nbsp;</p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><b>Gordon Shaw<sup>I</sup>;    Melville Saayman<sup>II</sup>; Andrea Saayman<sup>III</sup></b></font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><sup>I</sup>UFH/    Sanlam in Entrepreneurship. University of Fort Hare    <br>   <sup>II</sup>Institute for Tourism and Leisure Studies, North-West University,    Potchefstroom    <br>   <sup>III</sup>School of Economics, North-West University, Potchefstroom</font></p>     <p>&nbsp;</p>     ]]></body>
<body><![CDATA[<p>&nbsp;</p> <hr size="1" noshade>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><b>ABSTRACT</b></font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Even though risks    certainly influence travel and tourism patterns, very little research has been    conducted into how the industry generally perceives and manages risks. This    article aims to (i) identify the risks the South African tourism industry deems    important; (ii) construct a matrix for assessing the various risks identified    and (iii) determine whether sectors of the industry rate the importance of risks    differently. In total, there were 212 responses to the questionnaire in the    survey on South African tourism businesses. The statistical analysis included    a factor analysis and an ANOVA (analysis of variance). Nine factors were identified    and the ANOVA confirmed that sectors do perceive differing levels of importance    in the various risks. The risk assessment matrix showed that internal risks    are rated among the most important, even though little attention is paid to    these in the literature.</font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><b>Key words:</b>    risk management; factor analysis; tourism management; ANOVA</font></p> <hr size="1" noshade>     <p>&nbsp;</p>     <p>&nbsp;</p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="3"><b>Introduction</b></font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Tourism is regarded    worldwide as the industry with the highest growth rate and greatest potential    for job creation <i>(Business Day,</i> 2004). Like any industry, however, it    is susceptible to risk. Risks manifest in many forms, with disastrous consequences    for the industry if they are not managed effectively (Lepp &amp; Gibson, 2003).    This is especially true of developing countries (Burns, 1999). At the ITB Travel    Trade Show on 11 March 2009, the then Secretary General of the United Nations    World Tourism Organisation, Taleb Rifai, introduced his keynote speech by reiterating    the greatest challenges that have faced world leaders during the past half century.    Referring to risks such as the credit crunch, economic disarray, mounting unemployment    and the recessionary reduction in market confidence, he expressed the opinion    that no one knew how long these challenges would last (Rifai, 2009).</font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The current volatility    of the world economy resulting from the financial crisis, rising prices in the    commodity sector, the increasing price of oil and fluctuations in the exchange    rate means that the tourism demand has slowed down significantly. A report released    by the UNWTO (2009) made special mention of the number of international arrivals    that had declined slightly during the second half of 2008, a trend that continued    in 2009. The implication was that countries dependent on tourism, especially    developing countries, would be the hardest hit by a major decline in travel.    This would hold significant risk potential for tourism businesses, since it    would signify a decline in the profitability of the tourism sector, leading    in turn to insolvencies and job losses.</font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The survival of    any business, including those in the tourism industry, depends on identifying    and managing risks. This can be done either by eliminating the risk entirely,    or, if this is not possible, by ensuring that any adverse impact that might    occur will be kept to a minimum. Many risks can be transferred, for example,    by means of insurance. But regardless of whether or not a risk can be transferred,    it has to be identified if it is to be managed. Valsamakis, Vivian and du Toit    (2004:3) cite management guru Peter Drucker's definition of risk management    as 'the ability to manage the unexpected', while Gray and Larson (2006:208)    define it as a proactive approach to minimising the negative consequences of    undesirable events that may occur. The first step in risk management is therefore    identifying potential risks (Valsamakis et al., 2004).</font></p>     ]]></body>
<body><![CDATA[<p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Kerzner (2001)    reiterates that risk management and monitoring are not problem-solving techniques,    but should be seen as proactive techniques for obtaining objective information    to prevent the occurrence of adverse events or to minimise their negative impact.    The complexities involved in risk management in the tourism industry mean that    it must be seen as a process that requires constant review and updating. In    the tourism industry, a risk existing outside the South African borders may    represent an opportunity to be exploited for the benefit of the industry inside    the borders. For example, the 9/11 terrorist attacks in the USA had the effect    of decreasing world tourist arrivals to 0 per cent, with arrivals to the USA    declining by 4.7 per cent, while international travel to Africa increased by    3 per cent during the same year. Similarly, when elections were held in India    in 2009, the India Premier League (IPL) - the most expensive cricket tournament    in the world - was moved to South Africa because of terrorist threats, thus    benefiting the South African tourism industry.</font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">It is therefore    important for businesses and the tourism industry in general to possess not    only the ability to manage risk but also the skill and foresight to recognise    it, since risk will have a tremendous bearing on the growth of the industry.    Shaw (2010) goes so far as to maintain that the countries or destinations that    manage risks best will have a competitive advantage. The purpose of the present    research was, therefore:</font></p> <ul>       <li><font face="Verdana, Arial, Helvetica, sans-serif" size="2">to identify      the risks deemed important by the South African tourism industry (supply side);</font></li>       <li><font face="Verdana, Arial, Helvetica, sans-serif" size="2">to construct      a matrix for assessing the various risks identified; and</font></li>       <li><font face="Verdana, Arial, Helvetica, sans-serif" size="2">to determine      whether different sectors of the industry rate the importance of risks differently.</font></li>     </ul>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">This is important,    as risk management should be an ongoing process, seeing that it is critical    to the sustained safety, security and well-being of the industry at both the    local and the international levels.</font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The remainder of    this article is structured as follows: Section 2 provides an overview of the    literature on risks facing the tourism industry. This is followed by a description    of the method of research followed in Section 3, and the results of the analysis    in Section 4. In Section 5 the implications of the results for risk management    in the industry are discussed, before the article concludes in Section 6.</font></p>     <p>&nbsp;</p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="3"><b>2 Literature    review</b></font></p>     ]]></body>
<body><![CDATA[<p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">There are various    definitions of 'risk'. The UNISDR (International Strategy for Disaster Reduction)    defines it as 'the probability that a hazard will turn into a disaster', and    goes on to say that 'Vulnerability and hazards are not dangerous, taken separately.    But, if they come together, they become a risk or, in other words, the probability    that a disaster will happen' (UNISDR, 2009). Kerzner (2001) suggests that risk    involves lack of knowledge of future events, especially those events that have    a negative impact on the business, also referred to as unfavourable events.    Risk can be seen as the potential for loss or harm to an entity, where such    an entity could be a person, a group, an organisation a system or a resource    (Raval &amp; Fichadia, 2007). For example, technological risk means risks to    information assets, such as unauthorised changes or modification of programs    or data, theft of data and the unauthorised use of information assets. It can    therefore be accepted that, if risk were not controlled and managed, the industry    wold not grow and jobs would not be created.</font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Risk management    is concerned with every kind of tourism industry business - tour operators,    travel agents, hotels, lodges, game farms, bed and breakfast establishments,    national, provincial and local parks, attractions, festivals, restaurants, airlines    and guesthouses, to name but a few (see <a href="#f1">Figure 1</a>). Most of    these businesses are interdependent. For example, hotels, lodges, bed and breakfast    establishments and guesthouses are dependent on numbers of tourists. At the    same time, if these establishments could not provide sufficient accommodation,    the number of tourists coming to the country would be curtailed. Other sectors,    such as transport, the handling capacity of South African airports and harbours,    and the services offered by the food and beverage and entertainment sectors    increase the complexity, Should these not be effective and efficient the industry    would suffer. Adding to the challenges to hand is the fact that a large percentage    of tourism businesses are small, micro and medium enterprises (SMMEs). These    businesses find it more difficult than the larger ones do to absorb some of    the identified risks. Indeed, Saayman and Snyman (2005) have suggested that    this is one of the drawbacks for SMMEs in the tourism industry.</font></p>     <p><a name="f1"></a></p>     <p>&nbsp;</p>     <p align="center"><img src="/img/revistas/sajems/v15n2/05f01.jpg"></p>     <p>&nbsp;</p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Saayman and Snyman    (2005) divide risks in the tourism industry into two categories: those that    influence domestic travel and those that influence international travel. Examples    of domestic travel risks are crime, fires, fraud, complaints, low-skilled staff,    drop in turnover, bad marketing, poor maintenance of facilities and vehicles,    bad management and various transport risks. These risks are present at the destination.    Among the international travel risks are natural disasters (tsunamis, hurricanes,    drought), socio-demographics (ageing markets, family life-cycles and changing    structures), economics (recessions, increase in oil prices, exchange rates),    politics (sanctions, terrorism) and disease (H1N1-virus, HIV/AIDS, SARS, Ebola).    Even though these risks may be present outside the borders of a destination    they nevertheless affect travellers to that destination. What makes it difficult    for the tourism industry to determine the overall effect of risk is the fact    that not just one company is involved, but rather a whole industry or destination,    which is usually made up of many attractions and businesses. <a href="#f1">Figure    1</a> shows the flow of risk relating to the tourism industry. For example,    risks affecting game farms might pose no risk at all for hotels or other establishments.    Risks differ from one sector of the industry to the next.</font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">A number or authors    have identified risks relating to tourism and the tourism industry, although    the focus has been largely on external risks (i.e. risks that are beyond the    control of management - see <a href="/img/revistas/sajems/v15n2/05t01.jpg">Table    1</a>). However, tourism businesses also face normal internal operational risks.    Central to these internal risks is the lack of properly-trained staff, which    creates a gap in the skills needed for identifying and managing these risks.    Ozukan (2009) says it is not easy to provide human resources for the tourism    industry because, even though unemployment is at peak levels, 'we have been    unable to find qualified people for the service-intensive tourism business'.    The lack of qualified staff is thus seen to be limiting the growth of the tourism    industry. The risks faced by the industry are summarised in <a href="/img/revistas/sajems/v15n2/05t01.jpg">Table    1</a>.</font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Even though <a href="/img/revistas/sajems/v15n2/05t01.jpg">Table    1</a> makes reference to a considerable number of studies conducted on risk    in the tourism industry, it is evident that very few researchers have investigated    risk from the point of view of supply. Studies such as those by Lepp and Gibson    (2003) considered risk from the perspective of demand, indicating that different    groups of people, based on tourist role, gender and experience, view different    risks as important. Most other studies on this topic have addressed specific    risks such as crime and natural disasters and their impact on the tourism industry.    The literature review revealed that the following risks were making a significant    impact on travel and tourism. In terms of natural disasters, the South African    Weather Service found that floods, tornadoes and droughts made a significant    impact (SAWS, 2008). Moll (2008) found that fires, especially veld fires, had    a negative effect, not only because they destroyed attractions but also because    the recovery rate was usually slow and expensive. A tsunami, although occurring    rarely, naturally has catastrophic consequences: 240 000 people, many of them    tourists, were killed in the tsunami that struck Thailand, Indonesia and the    Philippines in 2004.</font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Ehmer and Heymann    (2008) are of the opinion that climatic change will also affect the African    continent most seriously, thus posing a significant risk in the future. When    it came to market changes, Saayman (2008) and State and Nedelea (2008) found    that ageing markets and changing family structures posed serious risks for the    tourism industry and future markets. Coupled with this, competition among destinations    for the same key markets is increasing. According to Carter (1998), Cossar (1996),    Cossins and Gin (1994) and the Public Health Agency of Canada (2009), the risk    associated with health issues is having a significant effect on the tourism    industry. Tuberculosis and HIV/AIDS have been identified by the US Agency for    International Development (USAID, 2009), while cholera and malaria have been    identified by the World Health Organisation (WHO, 2008) and Hadebe (2009) as    major health risks. However, Schonteich (2000) suggests that crime is the greatest    risk for tourism in many countries, especially developing countries, which is    corroborated by Abbott (1996) and the United Nations (UN 2005). In addition,    terrorist attacks are on the increase and have serious implications, as pointed    out by Aziz (1995), Enders et al. (1992), Ria Novosti (2010), S&ouml;nmez (1998)    and S&ouml;nmez and Graefe (1998).</font></p>     ]]></body>
<body><![CDATA[<p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Economic risks    for tourism are well documented in the literature. The following serve as examples:    Dwyer, Forsyth and Rao (2000), Durbarry and Sinclair (2003) and Gu (1995) on    interest rates and tourism activities; Oxelheim and Wihlborg (1998) on exchange    rates and tourism; Moffett, Stonehill and Eiteman (2008) on increased transport    cost and travel; Nxumalo (2009) on recessions and tourism; and Smith (2006)    on the importance of disposable income for tourism. Research into internal business    risks covers aspects such as fraud (Goss 2003) and the lack of funding and properly-trained    staff (Saayman &amp; Snyman, 2005).</font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">However, for purposes    of the literature review, no study could be found that addressed domestic and    international risks in the South African tourism industry from the perspective    of supply - in other words, what product owners and entrepreneurs view as key    risks. It became clear that the tourism industry is highly susceptible to risk    and that the list of risks seems to be virtually without limit. There is also    the impression that the tourism industry in general tends to be reactive rather    than proactive in addressing risks, producing many impact evaluations but few    risk forecasts; this is despite the fact that Shaw (2010) states that the frequency    and scope of risks across the globe have increased significantly during the    past two decades.</font></p>     <p>&nbsp;</p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="3"><b>3 Method of    research</b></font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><b>3.1</b>&nbsp;<b>Empirical    survey</b></font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The objective of    the survey, using a structured questionnaire, was to discover what the respondents    considered to be risk on a descending Likert scale: extremely high risk (5),    high risk (4), moderate risk (3), low risk (2), extremely low risk (1). The    questionnaire measured the importance (i.e. the weight) each respondent attached    to each risk-element identified.</font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The questionnaire    was structured in two sections. Section A asked for institutional information,    including the type of business, the province in which the business was situated,    the educational level of the owner or operator, the method of determining and    evaluating business risks, and the key factors considered important when determining    risk. Section B consisted of 57 statements related to risk intensity. Care was    taken to ensure that the statements covered all the risk categories identified    in the literature (see <a href="/img/revistas/sajems/v15n2/05t01.jpg">Table    1</a>). Internal operational risks (based on management literature) not normally    found in international case studies on tourism risks were also included.</font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><b>3.2</b>&nbsp;<b>Sampling    and survey method</b></font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The target population    was comprised of transport providers, tour operators, travel agents, destination    management companies, suppliers of accommodation (i.e. hotels, lodges, bed-and-breakfast    establishments and guesthouses), tourism brokers, suppliers of adventure tourism,    business tourism suppliers and tourism service providers. Approximately 800    members out of an estimated 1200 were randomly requested to complete questionnaires.    For a population size of 1000, a sample of 286 is sufficient, given a 5 per    cent level of confidence, while a sample of 333 is sufficient for a population    of 2000 (with 5 per cent confidence) (see Yamane, 1967). 800 is therefore a    sufficient sample size for the population. Databases of the Association of South    African Travel Agents (ASATA) and the South African Travel Services Association    (SATSA) were used, as these two organisations represent the interests of most    operators in the South African tourism industry. Two further reasons for this    choice were that members of the tourism industry are generally reluctant to    complete questionnaires, and that by using the total population as defined by    SATSA and ASATA, the resulting databases would ensure a high degree of relevant    representation.</font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Response was slow,    as had been anticipated, so a second request was sent out. Overall, 254 questionnaires    were returned. This equates with a response rate of 31.75 per cent, which is    considered satisfactory for this type of survey (Cooper &amp; Schindler, 2001:314).    Of the responses received, 212 (26.5 per cent of the 800 questionnaires sent    out) had been completed satisfactorily and could be used for analysis. A breakdown    of the sample and responses by business operator or owner is given in <a href="#t2">Table    2</a>.</font></p>     ]]></body>
<body><![CDATA[<p><a name="t2"></a></p>     <p>&nbsp;</p>     <p align="center"><img src="/img/revistas/sajems/v15n2/05t02.jpg"></p>     <p>&nbsp;</p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">As can be seen    from <a href="#t2">Table 2</a>, the highest percentage of tourism businesses    participating in the survey were tour operators (29.72 per cent), while the    lowest response rate was from hotels (5.66 per cent). Compared with the distribution    of the population across the different types of business, the response distribution    more successfully captured the main categories of the population. The responses    received were therefore not expected to be biased towards one particular business    segment of the industry. The distribution of the sample as measured over all    nine provinces of South Africa is shown in <a href="#t3">Table 3</a>. Again,    the population distribution was used as the benchmark against which the distribution    of the responses was assessed.</font></p>     <p><a name="t3"></a></p>     <p>&nbsp;</p>     <p align="center"><img src="/img/revistas/sajems/v15n2/05t03.jpg"></p>     <p>&nbsp;</p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The number of responses    reflected in <a href="#t3">Table 3</a> is higher than the 212 valid questionnaires    because some of the businesses are situated in more than one province, which    the respondent indicated on the questionnaire. Every province was therefore    sampled, with the major tourist areas, the Western Cape, Gauteng, KwaZuluNatal    and Mpumalanga, representing the bulk of the tourism industry. The response    is thus, as indicated below, a reasonably good representation of tourism businesses    in South Africa.</font></p>     ]]></body>
<body><![CDATA[<p><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><b>3.3 Statistical    methods</b></font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Microsoft&copy;    Excel&copy; was used for capturing the data, and basic data analysis and SPSS    (SPSS Inc., 2007) were used for the further analysis. The Kaiser-Meyer-Olkin    measure of sampling adequacy was then used to determine whether the covariance    matrix was suitable for factor analysis. Kaiser's criteria were used to extract    all the factors with Eigen values larger than one, because they are considered    to explain a significant amount of variation in the data (Pallant, 2007). A    factor analysis was used to identify sub-groups of risk through a combination    of attributes. The factor analysis included an Oblimin rotation with Kaiser    normalisation. Additional analyses used included an analysis of variance (ANOVA)    and Tukey's post hoc test, to determine whether the responses of the various    tourism businesses differed from each other.</font></p>     <p>&nbsp;</p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="3"><b>4 Results</b></font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The results are    discussed in two sections. The first discusses the results of the factor analysis    and the second uses ANOVA and Tukey's post hoc test to compare the importance    of the identified risks for the various sectors of the tourism industry.</font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><b>4.1 Factor analysis</b></font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The 57 statements    in the structured questionnaire, based on the seven risk categories in <a href="/img/revistas/sajems/v15n2/05t01.jpg">Table    1</a>, were subjected to a factor analysis to identify the various risk categories    and the items that defined them. Bartlett's test of specificity yielded p-values    of &lt;0,001, which indicates that the correlation structure is valid for factor    analysis of the data collected.</font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Nine factors were    identified, accounting for 60 per cent of the total variance (see <a href="/img/revistas/sajems/v15n2/05t04.jpg">Table    4</a>). All the factors had relatively high reliability coefficients, ranging    from 0.35 to 0.93. Although a reliability coefficient of 0.35 is low, as there    are only two risks included in this factor, all other reliability coefficients    were above 0.63 (one factor) and the other seven were equal to or greater than    0.82. This indicates that, overall, except for Factor 7 (health risks), the    results are reliable. The average inter-item correlation coefficients with values    between 0.15 and 0.69 also imply internal consistency for all factors. Moreover,    all items loaded on a factor with loading greater than 0.3. Relatively high    factor loadings indicate a reasonably high correlation between the delineated    factors and their individual items. The Kaiser-Meyer-Olkin measure of sampling    adequacy of 0.87 also indicated that the patterns of correlation were relatively    compact and should yield distinct and reliable factors (Field, 2005).</font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The results of    the factor analysis show the relative importance of the perceived risk to the    tourism industry operator by means of the mean value for each factor. A higher    mean value implies a higher perceived risk. Within each factor, the individual    items (risks) were ranked in order of the strength of relationship between the    item and the factor, from high to low, by means of the factor loading. The importance    of perceived risk increases as the value of the factor loading increases. The    results for each factor are shown in <a href="/img/revistas/sajems/v15n2/05t04.jpg">Table    4</a>.</font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Seven of the nine    factors are external risks and two, namely business insufficiencies and operational    risk, are internal. The results shown in <a href="/img/revistas/sajems/v15n2/05t04.jpg">Table    4</a> reveal that the risks with the highest mean values are: national image    and competitiveness (3.27), affordability and safety (3.18), and economic risks    (3.12). This is not surprising, seeing that these are all external risks over    which owners or managers have no control. However, an analysis of these top    three risks makes it clear that the national image and competitiveness risks    involve aspects that influence accessibility, such as basic infrastructure and    marketing or the lack thereof. Affordability and safety involve considerations    such as the exchange rate and personal safety and security. Many of these are    within the ambit of government. Even the third-highest rated risks, economic    risks, are influenced specifically by government's monetary policy (interest    rates and inflation). At the other end of this scale it is interesting to note    that the respondents do not regard health risks as major, as this factor received    a mean value of 2.11 out of 5 in terms of importance; this was despite the fact    that southern Africa (including South Africa) has high rates of HIV/AIDS and    is struggling to combat tuberculosis, while central Africa is regularly threatened    by Ebola outbreaks.</font></p>     ]]></body>
<body><![CDATA[<p><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><b>4.2 ANOVA and    Tukey's post hoc tests</b></font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">To determine whether    there was any significant difference between the mean responses by the various    businesses that comprised the sample, an ANOVA was applied. Tukey's post hoc    tests for unequal sample sizes were then performed on the factors that differed    significantly from the others to determine where this difference lay. The ANOVA    results are shown in <a href="/img/revistas/sajems/v15n2/05t05.jpg">Table 5</a>,    where it is evident that there were significant differences (p&lt;0.05) between    the various businesses' views on the importance of factors 3 (affordability    and safety) and 7 (health). For three other factors, 1 (operational risk), 6    (business insufficiencies) and 9 (transport risk), there were also moderate    differences between the various businesses (p&lt;0.1); these five factors therefore    warranted investigation.</font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Tukey's post hoc    test indicated that:</font></p>     <blockquote>        <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">i) Tour operators      and travel agents are more inclined than other tourism businesses, especially      bed and breakfast establishments and guesthouses, to regard affordability      and safety risks as important, presumably because the nature of their businesses      makes them more vulnerable to the risk items comprising this factor. The smaller      establishments are less likely to attract international business and therefore      are not as strongly influenced by considerations such as airline safety, crime,      and currency fluctuation.</font></p>       <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">ii)&nbsp;Travel      agents are less affected than are lodges by health-associated risks. Although      health risks are a discriminatory factor in terms of the types of tourism      business included in the survey, this factor has the lowest perceived risk,      particularly for travel agents and bed and breakfast establishments. Lodges      are most likely to be affected by health risks. Possible reasons for this      include closer personal contact with tourists and the location of lodges,      which will be elaborated on in section 5.</font></p>       <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">iii)&nbsp;Travel      agents are more inclined than other tourism businesses, especially bed and      breakfast establishments and guesthouses, to regard operational risks as important,      presumably because they are more exposed and vulnerable to such risks.</font></p>       <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">iv)&nbsp;Travel      agents are more vulnerable to risks associated with business insufficiencies      than guesthouses and are therefore more inclined to regard these risks as      more important. This is confirmed when considering the individual risk items      associated with business insufficiencies (listed in <a href="/img/revistas/sajems/v15n2/05t04.jpg">Table      4</a>).</font></p>       <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">v)&nbsp;Travel      agents rate transport risks as more important than do bed and breakfast establishments      and guesthouses. This may be because travel agents are more dependent on transport      and are therefore more exposed to such risks.</font></p> </blockquote>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Tukey's post hoc    test on the five factors showed that travel agents are more exposed than other    operators or business owners, and are therefore more vulnerable to most risks    associated with the tourism industry. The operators or business owners least    affected by risk appear to be the bed-and-breakfast establishments and guesthouses.    It is therefore important for travel agents to monitor risk continuously and    keep their risk management plan up to date. If they implemented appropriate    preventive action, travel agents could minimise the negative impact of the risks    associated with their business. This applies particularly to those risks regarded    as internal to the business, which include operational aspects and business    insufficiencies.</font></p>     ]]></body>
<body><![CDATA[<p>&nbsp;</p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="3"><b>5 Implications    for risk management</b></font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Valsamakis et al.    (2004) suggest that risk management is an ongoing process, not to be seen in    isolation or as a single event. This process starts with risk identification,    followed by careful evaluation of the risk to ascertain where control is most    necessary, before finally providing financially for the consequences of the    risk. To manage a risk, it must first be identified, before any type of risk    management programme can be put into action. This part of the process should    be viewed as the most important function of the risk management programme and    should be approached in a structured, systematic and well-managed manner.</font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Gray and Larson    (2006) also indicate that any risk management process starts with risk identification    (see <a href="#f2">Figure 2</a>). This is then followed by risk assessment (or    evaluation), before a proper response is developed and a strategy implemented.</font></p>     <p><a name="f2"></a></p>     <p>&nbsp;</p>     <p align="center"><img src="/img/revistas/sajems/v15n2/05f02.jpg"></p>     <p>&nbsp;</p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The focus of this    research was on the first step of this process, risk identification. It was    shown that, although most of the literature focuses on identifying external    risks, internal risks are an important aspect often overlooked in the South    African tourism industry. Two internal risks, operational aspects (factor 1)    and business insufficiencies (factor 6), are confirmed by researchers such as    Goss (2003) and Saayman and Snyman (2005). The risks captured by these two factors    point to key success factors in the tourism industry, since qualified and properly-trained    and experienced staff determine the success of a tourism business (Geldenhuys,    2000). The findings of the present study made it clear that most of the internal    business risks hinge on skills and Risks related to economics and competitiveness    issues in tourism are well documented, and this research mainly confirmed the    findings of, among others, Durbarry and Sinclair (2003), Gu (1995) and Oxelheim    and Wihlborg (1998). The same applied to crime and safety and security risks    (see Schonteich, staffing matters - in other words, employee risks.</font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Concerning external    risks, the research showed that tourism businesses do not view domestic external    risks separately from international ones; they are more inclined to see as external    only those risks over which businesses in South Africa have little control.    In general, the findings of the research contradicted studies by Cossar (1996),    the WHO (2008) and Hadebe (2009), who identify health risk as an important risk    facing the industry. In addition, infrastructure is not prominent in the literature,    with infrastructure being seen mainly as influencing tourism development rates,    but not threatening any risk. However, this research revealed that infrastructure    forms an essential part of national image and competitiveness risks and that    it is of key importance to the South African tourism industry.</font></p>     ]]></body>
<body><![CDATA[<p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Risks related to    economics and competitiveness issues in tourism are well documented, and this    research mainly confirmed the findings of, among others, Durbarry and Sinclair    (2003), Gu (1995) and Oxelheim and Wihlborg (1998). The same applied to crime    and safety and security risks (see Schonteich,2000). From the results above,    as well as from the literature review, it becomes apparent that the risks faced    by businesses in developing countries differ from those in developed countries.    Most notably, the risk posed by national image and competitiveness (including    tourism infrastructure) in developing countries like South Africa would in all    probability probably not be cited as a major risk in developed countries.</font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The results also    indicated that risks differ for different businesses in the tourism industry.    One sector that is more susceptible to risk is the travel agency sector, while    accommodation units experience lower levels of overall risk. The only exception    here is the health risk, which affects lodges more than travel agents. This    might be because lodges are usually located in more natural settings, which    are more exposed to health hazards and health legislation. In addition, lodges    are more labour-intensive by nature, and the interaction between staff, visitors    and owners is more personal, posing increased risk of disease transmission.</font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The second step    in the risk management process is to assess the importance of the risk. One    possible method of doing this is to use a risk matrix to classify the risks    into the three categories of high, medium and low. The probability of occurrence    and the possible consequences were determined using <a href="#t6">Table 6</a>    as a guideline.</font></p>     <p><a name="t6"></a></p>     <p>&nbsp;</p>     <p align="center"><img src="/img/revistas/sajems/v15n2/05t06.jpg"></p>     <p>&nbsp;</p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The risk assessment    matrix in <a href="/img/revistas/sajems/v15n2/05f03.jpg">Figure 3</a> was used    to classify the severity of each risk as high (8-11), medium (5-7) or low (1-4).    The severity ranking in the matrix is a logical derivation from the ranking    of occurrence and consequence. Starting in the top right-hand corner with the    highest ranking of 11, which is derived from a probability rating of 6 and a    consequence rating of 6, the severity ratings are then decreased by 1 for each    square, moving from top to bottom in the right-hand column and then left to    right in the top row as the risk severity decreases. The lowest severity risk    has a matrix ranking of 1 (bottom left-hand corner).</font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">High severity risks    (8-11) require immediate action to eliminate them or at least reduce the possibility    of risk or its impact. For medium severity risks (5-7), preventive measures    should be implemented. Risks in the low severity category (1-4) do not require    action in the immediate future and can be accepted, but personnel ought to be    aware of them.</font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Since travel agency    sector clearly differs from the accommodation sector in the tourism industry,    a typical risk assessment matrix for travel agents would look as follows, based    on the results of this research. Since the questionnaire did not assess the    probability of the event or its severity, this matrix is based solely on the    importance ranking. Future research on the probabilities and severity of the    various risks would improve the matrix. Travel agents rated health risks (factor    7) as the lowest in importance, with an average score of 1.81. Five factors    obtained an average importance score of between 2 and 3 on the Likert scale    and are therefore viewed as risks with a medium level of severity. These risks    were environmental (factor 2 - 2.33), operational (factor 1 - 2.53), crime and    political (factor 4 -2.76), national image and competitiveness (factor 5 - 2.95)    and transport (factor 9 -2.95). The remaining three factors scored an average    above 3, which warrants their being placed in the category of risks with consequences    of high severity. Travel agents view affordability and safety (factor 3) as    the most important risk, assigning an average of 3.59 to the items that comprise    this risk. It therefore takes top place in the risk assessment matrix (see <a href="/img/revistas/sajems/v15n2/05f04.jpg">Figure    4</a>).</font></p>     ]]></body>
<body><![CDATA[<p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Given the information    in <a href="/img/revistas/sajems/v15n2/05t04.jpg">Table 4</a>, it is evident    that the risks requiring the full and continuous attention by management in    travel agencies are affordability and safety, economic risks and business insufficiencies.    Strategies for controlling these risks and contingency plans to deal with them    should be in place.</font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">These are followed    by infrastructure and transport risks, crime and political risks and operational    risks. Management should ensure that proper responses to these risks are formulated    and in place so that the business will be prepared to deal with problems if    they arise.</font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The following implications    are evident. Firstly, while most research has focused on external risks, this    research found that two internal risk categories were the most important in    the tourism industry. There should therefore be greater focus on addressing    internal risks, as they are within a business's ambit for dealing with them.    This would, however, require tourism businesses to develop specific skills and    acquire specific knowledge on issues pertaining to financial management, market    trends, market analysis and management skills. In this regard, the tourism industry    should work more closely with training institutions in order to address the    risk posed by skills shortages and insufficiently skilled or unskilled staff.    Continuous education and training should be a priority for businesses and training    institutions. This is of the utmost importance, since most of the internal risks    involve employee risks.</font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Secondly, the results    revealed that tourism businesses and the different levels of government will    have to cooperate more closely if businesses are to proactively address various    external risks. The issue of national image and competitiveness is a case in    point. The results for this risk suggest that the current systems or institutional    arrangements (i.e. government, business councils and private operators) are    not fully inclusive. Aspects like basic infrastructure, high levels of safety    and security and the need for marketing should be addressed by government, but    in collaboration with the industry. Additionally, it is also critical for the    owners and managers of tourism businesses to be kept informed of developments.    The respondents in this study were all members of very active and well-organised    organisations. If <i>they</i> are unaware of developments in these areas, it    implies that those who do not belong to any such organisations will be even    worse prepared to deal with external risks.</font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Thirdly, it is    evident that the severity of the risks for the various sectors of the industry    differs. There is therefore a need for both continuous research and sector-specific    solutions that cater for each sector. While other industries, such as banking    and insurance, have risk management officers to address risks and have strategies    and plans in place, this is not yet standard practice in the tourism industry,    despite the industry's susceptibility to risk.</font></p>     <p>&nbsp;</p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="3"><b>6 Conclusion</b></font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The purpose of    this article was to identify risks that tourism businesses in South Africa deem    important and to determine the extent to which different businesses are challenged    by different risks. With this information, the first two steps in the risk management    process of tourism businesses are addressed.</font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">This research contributes    to the field by being one of a handful of studies looking at risk holistically,    identifying the important risks and obtaining insight into how tourism businesses    (the supply-side) rate the different risks. The research indicated that risk    management in tourism is a complex issue, with internal and various external    risks that have to be taken into consideration.</font></p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The results of    the factor analysis identified nine risk factors, two of which were internal    and seven external. The literature review revealed that most risk management    in tourism takes place reactively. To promote proactive risk management, this    research proposes greater co-operation between the industry and training institutions    on the one hand and industry and government on the other. In addition, previous    research has focused mainly on external risks, whereas this research shows that    internal risks faced by businesses in the industry are among the most important.    The research therefore proposes that the tourism industry be better equipped    to deal proactively with risks.</font></p>     ]]></body>
<body><![CDATA[<p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Finally, this research    found that the importance of various risks differs for different sectors in    the tourism industry. This requires further research efforts, as not all the    sectors were addressed in this research, and strategies on how to deal with    risks would also differ. Further research could include analysing and comparing    the risks faced by businesses in developed and developing countries. Furthermore,    analysis of the probability of an event occurring and the corresponding severity    of the event should improve the results of the risk assessment matrix.</font></p>     <p>&nbsp;</p>     <p><font face="Verdana, Arial, Helvetica, sans-serif" size="3"><b>References</b></font></p>     <!-- ref --><p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">ABBOTT, P.L. 1996.    <i>Natural disasters,</i> Chicago, Ill.: Brown.</font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[&#160;<a href="javascript:void(0);" onclick="javascript: window.open('/scielo.php?script=sci_nlinks&ref=621888&pid=S2222-3436201200020000500001&lng=','','width=640,height=500,resizable=yes,scrollbars=1,menubar=yes,');">Links</a>&#160;]<!-- end-ref --><!-- ref --><p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">AZIZ, H. 1995.    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<body><![CDATA[<p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Accepted: February    2012</font></p>      ]]></body>
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