.

Bee Successful Ltd

WAR and

ECONOMIC DISRUPTION

Ian YeomanScenario Planning Research

ManagerVisitScotland

Scenario Planning

Bee Successful Ltd.

• Paints a picture in order to create an understanding

• Paints a range of pictures

• Mental models, changing attitudes, learning

• Shell International

• Why Scenario Planning at VisitScotland?– Foot & Mouth

– 11th September

– An uncertain world

– Tourism and the world

Background

Bee Successful Ltd.

• Lots of uncertainty around war and economic disruption– Bear Market

– Tourism and aviation always a first consequence of war and terrorism

• Impact could be severe on the industry

• Uncertainty

• Explore this pro-actively with Scenario Thinking

(Stretch scenarios)

Positioning the Investigation

Bee Successful Ltd.

• Addressing war and economics simultaneously - as disruption

• Have not considered ‘total destruction’ scenarios

• Five year time frame

• The scenarios address alternative outcomes of a system extending beyond acceptable tolerance levels

• Any number of Scenario may happen - we used a structured and well tested approach engaging Visual Thinking

What We Did

Bee Successful Ltd.

• Constructed a range of level one scenarios– This is a story

• Connected scenarios to Scottish Tourism & VisitScotland– Mental models & learning

• Tested scenarios against business plans in order to create contingency plans

• Developed level two scenarios as the situation developed• Econometric modeling of scenarios too measure impact

– holiday trips

– business tourism

– overseas tourism

• Communication strategy

Creating the Four Scenarios

Bee Successful Ltd.

NATURE OF DISRUPTION

EC

ON

OM

IC

BE

HA

VIO

UR

BALKANS

HICCUP

MERCHANT OF DOOM

NEW ATLANTIS

VALLEY OF DEATH GLOBAL TERRORISM

NEW DAWN HOW THE WEST WAS WON

Themes

Alternative Outcomes

Scenarios

Global Terrorism

Bee Successful Ltd.

Protracted military resistance & urban warfare Significant casualties and collateral damage. Major U.S and U.K casualties / political problems with

anti-war movement Iraqi people become actively hostile to Britain US loses support of U.N. Britain, Turkey or one Gulf ally drops out as US ally. Iraq attacks oil facilities with WMD and there is

significant damage Iraq successfully attacks Arab / Turkish bases or cities Iraq attacks Israel with WMD / triggers major responses

or has highly lethal effects

War Story

Global Terrorism

Bee Successful Ltd.

Containment

‘Me’, ‘now’, ‘fear’ and constantly looking over your shoulder

Terrorism activity that gets out of control

Terrorism incident in Scotland Anti-Americanism Disruption to the transport system,

with a major closedown on one day Continued heavy decline in the stock

markets A couple of insurance companies go

bust, unemployment, deflation Deflation

The Story

How The West Was Won

Bee Successful Ltd.

Major urban fighting is localised to a few areas Limited civilian deaths and little collateral damage No meaningful use of weapons of mass destruction (WMD)

against U.S troops, Israel or the region No reduction in oil production/exports by OPEC Saudi Arabia increase oil production No major challenges in allied countries to friendly regional

governments No major acts of terrorism in the US, UK or allied countries• No significant damage to oil producing capacity in Iraq or

elsewhere

War Story

How The West Was Won

Bee Successful Ltd.

Economic Balance

This is a war which we win No terrorism activity This is a scenario that is a minor

blip George Bush and Tony Blair show

strong leadership and ‘take out’ the problem.

A small regional conflict with no terrorism

Short term unemployment Restructuring in the city Confidence returns to the markets

after the conflict Economic growth

The Story

Where is the War?

©Bee Successful Ltd.

No-one Escapes(for a very long time)

War Affects the EntireMiddle East(reshapes it)

War Affects Them(localised)

War on Our Doorstep(continuous)

Level 2

Bee Successful Ltd.

• Folding scenarios into tourism– Impacts on different markets and products

– Developing contingency plans

– Testing

– Updating scenarios• Centre for Strategic and International Studies (Washington)

– Quantification of such scenarios• Econometrics

• Forecasting based upon drivers– Oil, GDP, Exchange Rates, Assumptions

Workshops

Bee Successful Ltd.

ECONOMYECONOMY

WEALTHHEALTH AND

STRESS

WEALTHHEALTH AND

STRESS

OIL AND TRANSPORTOIL AND TRANSPORT

POLITICS ANDMEDIA/ PARLIAMENT

POLITICS ANDMEDIA/ PARLIAMENT

FAMILY ANDCOMMUNITY

FAMILY ANDCOMMUNITY

HOME -WHAT YOU KNOW -COMFORT; SAFETY

HOME -WHAT YOU KNOW -COMFORT; SAFETY

VERY HIGHSECURITY

1

SECURITY -CITY

CENTRES

2

CONSUMERSPENDING

GOES DOWN

4

INCREASEDPETROLPRICES

7

SEPT 2001PETROLCRISIS -STRIKE

8

PANIC!RUMOUR!

9

PEOPLEINVEST IN

THEIRPROPERTY

10

INCREASE INCRIME

11

HEALTHPANIC

STRESS

12

CITYCENTRESPROBLEM

13

INCREASEINTEREST

RATES

14

HIGH GOV'TSPENDING ON

BASICS

15

BANKRUPTGORDON

16

SAFETY ISPARAMOUNT

17

PEOPLE STAYAT HOME

18

CHANGE INFAMILY

CULTURE

19

HIGHDISTRUST OFMINORITIES

20

FEAR OFWHAT

GOVERNMENT

21

DEMOCRATICDEFICIT

22

BNPEQUATION

23

FEARS OFPENSIONS

24

PENSIONS-FEAR OF

NON-ROSEYFUTURE

25

INTEREST INHEALTH

26

BALI - BEWITH FAMILY

28

WORRIEDABOUT THEIR

FAMILIES

29

FOCUS ONTHE HOME

(MORTGAGE)

32

SPEND MOREMONEY ONDURABLES

33

MIGHT CHANGECAR TO A LESS

THRISTYMODEL

34

INCREASE INCOMMUNICATION (SPEND)

35

FOCUS ONFAMILY

(HELPINGEACH OTHER)

38

AVOIDINGCITIES - OAP

39

MORE HOMESECURITY

40

STAYING ATHOME

41

YOUNG -FAMILIESTHINKING

ABOUT FUTURE

42

DON'TBOTHER TO

VOTE(YOUNG)

43

DO MORELOCALTHINGS

44

OAP'S SPENDTIME WITHPEOPLE

45

SAFETY

46

MOREHEALTH

CONCIOUS..AT HOME

47

MORE OF ACOMMUNITY

SPIRIT

48

MOVE TORURAL

ENVIRONMENT

49STANDARD

OF LVING ETC

51

LOWINTEREST

RATES

52

INVESTMENTIN PROPERTY

53

SHAREPRICES FALLTO RECORD

LOWS

55

VALUE OFPOUND

UNSTABLE

56

UNSTABLEEURO

57

WORSTRECESSION

IN LIVINGMEMORY

58

TAXINCREASES

59

POUNDWEAKENING

60

EUROBETTERTOURISM

61

TRADE MORELOCAL

62

PRICES GOUP FORSTAPLEITEMS

66

GOVERNMENT CHANGE

69

E.U. POLICIES

70

REDUCTIONIN

GOVERNMENT POWER

71

INCREASE INTRADEUNIONS

72

MEDIAPOWER

73

BEHIND THEHOME

BARRICADE

82

FOCUS ONFAMILY ANDCOMMUNITY

83WEALTH

HEALTH ANDSTRESS

84

GLOBALECONOMY IN

CRISIS

85

POLITICALMELTDOWN

87

FUEL RULES

89

YOUNG AT HEART;YOUNG AND CAREFREE

YOUNG AT HEART;YOUNG AND CAREFREE

LESSINDULGE

(LESS TRIPS)

27

ATTITUDE OFTEENAGERS -

NOTAFFECTED

30

DAY TO DAYLIFE MOVES

ON

31

TEENAGERS - CREDIT CARD

SPENDING

50

F.I.

STUFF IT ANDGO

88

JOBSJOBS

MULTI-NATIONALBRANDS

LOSEPOWER

3

PRICEINCREASES

5

SERIOUSECONOMICRECESSION

6

WORRIES OFJOB

SECURITY

36

INCREASE INSPENDING(YOUNG)

37

ACCELERATEDDOWNSIZING

54

EXPORTSDOWN

63

IMPORTSDOWN

64

REDUCTION INBUSINESS

DEVELOPMENT

65

UNEMPLOYMENT!

67

RECORDUNEMPLOYME

NT LEVELSFEARED

86

VisitScotland 21-02-03

EXAMINE THE CONSEQUENCES OF WAR AND ECONOMIC SCENARIOS WITH THE SCOTTISH BORDERS ATB

PURPLE: ECONOMIC FACTORSBLUE: STORY TITLES

Econometrics

Bee Successful Ltd.

• Impact on our core markets

– Short Breaks

– Business Tourism

– Overseas Tourism

• Base forecasting

– if nothing went wrong

The Baseline ProjectionsUK Holiday and Business Spend

£ Millions - Expenditure

Bee Successful Ltd.

0

500

1000

1500

2000

2500

3000

3500

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

All holidays 1-3 nights 4-7 nights 8+ nights Business/Work

The Baseline ProjectionsInternational Expenditure

Bee Successful Ltd.

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

All holidays Business Other Base

Global Terrorism: Effect on Tourism

Bee Successful Ltd.

4% decline in tourism trips in 2003 with a 4.5% decline in 2004. Recovery does not begin until 2005

Scotland is threatened as a ‘safe’, destination Certain tourism resorts in Scotland ‘don’t see’ any tourists in 2003 Major disruption through international tourism, as people stay at

home or travel locally Focus on friends and relatives Collapse of the travel agent market as the internet becomes

stronger Moderate substitution effect between international tourism and

domestic tourism Well being, heritage, culture and freedom are robust and do well. Experience becomes even more important

Global TerrorismUK Holiday and Business Spend

£ Millions - Expenditure

Bee Successful Ltd.

0

500

1000

1500

2000

2500

3000

3500

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

All holidays 1-3 nights 4-7 nights 8+ nights Business/Work

Global Terrorism - UK Tourism

Bee Successful Ltd.

Short break market spend declines but increases as a proportion of total market

Decline in Business Tourism, due to weak economy Short break trips declines by more than 5%, due to

pension problems Substantial squeeze on tourism spending. Price sensitivity becomes the word. Tourism becomes more focused on core activities. Withdrawal from the international tourism market

Global TerrorismInternational Expenditure

Bee Successful Ltd.

0

200

400

600

800

1000

1200

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

All holidays Business Other Base

Global Terrorism - Europe Markets

Bee Successful Ltd.

International hubs become the focus for disruption Security costs become prohibitive resulting in

decline in short haul European travel Further consolidation airline sector, with many

national carriers going burst• Propensity to travel still there but Scotland suffers

from lack of direct links

What Happened?

Bee Successful Ltd.

• 2003 was a good year for tourism?– Safety, weather, Euro, delayed decisions, – Scenarios for Scotland– Timelines– Threats to the short break market I.e., saving ratios

• Scenario Planning is about pictures

• Scenario Planning is about moving mental models

• Scenario Planning is not easy and resource expensive

• Scenario Planning is a ‘sense making process’

• Scenario Planning is a positive process of engagement