TOUR 310

The Asian Financial Crisis

By

Nadine Poser

Executive Summary

After a period of economic upturn in the beginning of the 1990s, Asia has been concussed by a

severe fiscal crisis in 1997. As the name implies the Asian Financial Crisis happened in Asia,

more precisely in the Eastern Pacific Part of Asia (see Appendix A). Countries that have been

affected most by the crisis are Indonesia, South Korea and Thailand. But also the Philippines,

Malaysia, Laos and Hong Kong and even Australia had to deal with the unfavorable situation.

Merriam-Webster Online Dictionary defines a crisis as "an unstable or crucial time or state of

affairs in which a decisive change is impending; especially: one with the distinct possibility of a

highly undesirable outcome" (2008).

The Asian-Pacific region counts to the leading tourism destinations in the world because of its

rich biodiversity, beautiful beaches, cultural curiosities, a great interpretation of hospitality and

nevertheless affordable prices. This report investigates the economic factors which led to the

crisis. Further the impacts on the tourism industry are demonstrated and suggestions are made

how the crisis probably could have been prevented combined with improvements for the future.

TABLE OF CONTENTS

COVER PAGE

i

EXECUTIVE SUMMARY 1

TABLE OF CONTENTS.

2

I.

INTRODUCTION . 3

II.

MAIN PARAGRAPH 4

Factors that caused the Crisis 4

Impact on Tourism 5

Crisis Management 7

III.

CONCLUSION 9

IV.

REFERENCES 10

Appendices

A. Map Asia Pacific 12

B. Contribution of Tourism to Economic Growth 13

C. Changes in visitor arrivals 1996-1998 14

D. Baccarat monthly drop, October 1997 ­ September 1998 15

I. Introduction

Tourism is the leading industry in many East Asian countries. Among them Thailand, Singapore

and Hong Kong are still the most frequently visited by tourists, but destinations such as

Indonesia, the Philippines, South Korea, Malaysia and China have already closed the gap and

successfully developed a strong brand recognition by attracting more and more tourists (Davies,

2003).

Meanwhile Asia has been suffering some severe crises during the last decade, affecting the

region as a tourism destination and hence the overall economic performance. Alongside

terrorism threats as a result of the attacks in Bali, the area also went through a period of

economic instability in the late 1990s, known as the Asian Financial Crisis. Lasting only a bit

longer than two years nobody saw it coming, although there have been similar crises before since

the 17th century, one of the latest in Latin America in the 1980s (Prideaux, 1999).

I chose the topic because I think it will be interesting to investigate the impact of an economic

crisis on the traveling behavior of tourists. It is obvious that tourists are scared of terrorism,

diseases like SARS or natural disasters such as the Tsunami because they fear injuries or death.

But does an economic crisis influence their attitude towards a tourism destination? To be honest,

I didn′t know anything about the Asian Financial Crisis until I wrote this report, but since

assignments should have the outcome to broaden the student′s knowledge about a particular

topic, I take this homework as a challenge by investigating an issue that I have never heard about

before.

Since there are a lot of reliable resources within the research databases nowadays, I used the

internet as a main source for my research. In my opinion the World Wide Web provides the most

up-to-date information since there are things happening every day and the web can easily be

updated. But it was quite difficult to find research papers addressing the tourism issue in their

reports. Prideaux also comments in his paper that the impacts of the crisis on tourism have not

been investigated that closely. He sees that as a "lack of detailed economic analysis in the

tourism literature" (1999).