Reputation Management in the Tourism Industry

Abstract

This article will discuss reputational risk, its implications for companies involved in the tourism industry, and how companies’ supervisors assess the management’s ability to measure and monitor this risk. Reputational risk is defined as the potential impacts of negative publicity related to an institution’s/company’s/country’s business practices, regardless true or not; those impacts can range from a decline in the customer base or revenue reductions to costly litigations. Also, destination reputation is the public’s general feeling, impression and cognition of it. A good reputation is an intangible asset for tourism destinations and a vital aspect of sustainable development. Reserving a good reputation revolves around effectively communicating and building solid relationships. Reputational risk is managed through strong corporate governance. How should reputational risk be managed internally in tourism industry companies? The following are just a few examples of key elements for managing reputational risk: Maintaining timely and efficient communications amongst government, customers, boards of directors of companies in tourism industry, and employeesEstablishing strong enterprise risk management policies and procedures throughout the organization, including an effective anti-fraud programReinforcing a risk management culture by creating awareness at all staff levelsInstilling ethics throughout the organisation by enforcing a code of conduct for the board, management, and staffDeveloping a comprehensive system of internal controls and practices, including those related to computer systems and transactional websitesComplying with current laws and regulations and enforcing existing policies and proceduresImplementing independent testing and transactional testing on a regular basisEstablishing a crisis management team in the event there is a significant action that may trigger a negative impact on the organization and the touristic destination as a whole.Although building a destination’s reputation may take years, it can certainly be damaged or even destroyed very quickly. Reputational risk depends on a combination of factors daily facing the tourism industry. Governments, local authorities and senior management are responsible for measuring and monitoring reputational risk and therefore must remain vigilant and active in providing the safeguards to prevent loss of reputation.