This Is a Growing Risk for Tourism-Related Companies

Tourism is big business. According to Statista, the total contribution from the tourism industry to the global economy was about US$7.6 trillion in 2014. In Singapore, total tourism receipts in the same year came to S$23.5 billion, according to the Singapore Tourism Board.

But, with the recent atrocities committed by terrorists all over the world, with the latest events being in Brussels, Belgium, it seems the world is becoming more and more unsafe. For companies managing iconic tourist destinations, terrorism is an added risk they have to take note of now.

In Singapore, companies such as Genting Singapore PLC (SGX: G13) and Straco Corporation Ltd (SGX: S85) are owners and managers of some of Singapore’s most iconic tourist destinations. Genting Singapore is the owner of Resorts World Sentosa, the integrated resort with theme parks, hotels, casinos etc. that’s located on the island of Sentosa. In the case of Straco, in late 2014, it bought over the Singapore Flyer, Asia’s largest observation wheel.

Terrorism can have a strong negative impact on tourism in Singapore if attacks unfortunately do happen here. Yet, terrorism is a problem that is far too big for an individual company to handle. In the past annual reports and quarterly reports of Genting Singapore and Straco, there have been few mentions by the company’s management teams on how they intend to address such risks.

In view of the recent events in global terrorism, the duo – and any other tourism-related company for the matter –  want to take a serious look at the security measures on their properties. That’s also something investors may want to keep an eye on.

Foolish Summary

Investors in companies that depend on tourism assets for business may want to encourage their management teams to address terrorism-related risks head-on. In a world filled with uncertainties, it is better to be safe than sorry.

For more investing insights and updates on what's happening in the world of finance, you can sign up here for a FREE subscription to The Motley Fool's weekly investing newsletter, Take Stock SingaporeIt will teach you how you can grow your wealth in the years ahead.

Also, like us on Facebook to follow our latest hot articles. The Motley Fool's purpose is to help the world invest, better.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim owns shares in Straco Corporation.