There have been numerous incidents in one or more countries in the past that led
to sudden and unexpected reductions in demand for tourism services and
confronted travel businesses with an economic environment of high uncertainty.
However, the current financial and economic crisis appears to be of a larger
dimension than most other crises before, and numerous experts around the globe
agree that the present economic slowdown has the potential to become one of the
most challenging and transformational disturbances on a supranational level since
the Great Depression. Predictions of future developments are vague and can only
be educated speculation at best, yet for the tourism industry the initial effects of
this first major crisis of the globalization era are already clearly perceptible.
Drawing on an extensive review of already existing literature, this paper explains
the various milestones during the period that led to the 2007-2009 global financial
and economic disorder, and subsequently considers a choice of selected key
implications for the tourism industry and associated businesses. The aim of this
paper is therefore to provide an academically substantiated reference guide for
market participants and policy-makers alike, with the ultimate purpose of making a
contribution to reduce the number of cases where wrong decisions lead to major
difficulties or even the failure of a destination or an individual business.
Results of the research indicate that the identified impacts are likely to intensify
throughout 2009 and 2010, and that the crisis will most likely also entail
fundamental changes for the industry on a long-term basis. In particular, it was
found that in the medium term decreased public funding for tourism projects and
restricted access to capital are likely to force many travel businesses into serious
liquidity problems. This may cause a series of reactions, including widespread
workforce reductions and severe cuts in the quality of the provided services.
Besides, the crisis is likely to have considerable effects on the way leisure and
corporate travel is conducted, as for instance shorter and less frequent trips or a
stronger tendency towards cost containment. However, the paper also points out
that every crisis embodies a great number of opportunities and provides an
analysis of a range of selected chances for destinations and tourism businesses.
Table of Contents
1 INTRODUCTION
2 HOW THE 2007-2009 GLOBAL ECONOMIC CRISIS EVOLVED
2.1 Recent historical background
2.2 The problem of sub-prime lending
2.3 The end of an era
2.4 Effects of the financial crisis on the real economy
3 RESEARCH METHODOLOGY
4 IMPACTS OF THE CRISIS ON THE TOURISM INDUSTRY
4.1 General aspects
4.2 Key negative impacts
4.2.1 Decreased public funding for tourism projects and infrastructure
4.2.2 Restricted access to capital
4.2.3 Excursus: Unemployment in the tourism industry
4.2.4 Changing patterns in leisure travel
4.2.5 Changing patterns in corporate travel
4.3 Selected possible opportunities
4.3.1 Shift in source markets
4.3.2 Intensification of the trend towards ‘Smart tourism’
4.3.3 New spirit of companionship
4.3.4 Other opportunities
5 DISCUSSION AND CONCLUSIONS
Objectives & Key Topics
The primary goal of this paper is to examine the evolution of the 2007-2009 global financial crisis and evaluate its short- and long-term implications for the tourism industry and associated businesses to guide stakeholders in informed decision-making.
- The historical origins and mechanisms of the global financial crisis.
- Negative economic impacts on tourism, including funding and capital access.
- Transformation of leisure and corporate travel patterns and consumer behavior.
- Emerging opportunities for tourism, such as new source markets and sustainable practices.
- Strategic recommendations for crisis management and recovery in the tourism sector.
Excerpt from the Book
2.2 The problem of sub-prime lending
In the course of the 1990s the financial community ‘invented’ a number of new credit derivatives with the goal not only to enable commercial banks to access financing options apart from traditional methods, but also to mitigate the inherent risks of weakly rated loans by simply spreading them over the entire banking system. Soon a broad range of structured finance products like Credit Default Swaps (loan default insurances) appeared, and a certain lack of regulation allowed the emergence of a number of highly complex and nontransparent monetary tools that were difficult to control. Collateralized Debt Obligations (CDOs), which can be described as packages of loans of unequal security levels that bundle high-quality with low-quality (‘sub-prime’) assets in order to spread the risk of defaults, became one of the most prevalent instruments in this segment. It goes without saying that investment banks like Lehman Brothers played a key role in this business.
Summary of Chapters
1 INTRODUCTION: This chapter introduces the global financial crisis originating from the U.S. sub-prime mortgage sector and outlines the paper's aim to provide an academic reference for tourism managers navigating this uncertain environment.
2 HOW THE 2007-2009 GLOBAL ECONOMIC CRISIS EVOLVED: This chapter analyzes the historical background leading to the crisis, focusing on interest rate policies, the sub-prime mortgage model, and the subsequent systemic collapse of major financial institutions.
3 RESEARCH METHODOLOGY: This chapter outlines the hermeneutical, secondary research approach used to interpret existing literature and professional forecasts regarding the financial crisis and its impacts on tourism.
4 IMPACTS OF THE CRISIS ON THE TOURISM INDUSTRY: This chapter explores the negative consequences for the tourism sector, such as reduced funding, restricted capital access, and shifting travel patterns, while also highlighting potential opportunities like ‘Smart tourism’ and new market segments.
5 DISCUSSION AND CONCLUSIONS: This chapter synthesizes the research findings, emphasizing the necessity for strategic adaptation, innovation, and restored consumer confidence to ensure the future resilience of the tourism industry.
Keywords
Global Financial Crisis, Sub-prime Mortgage, Tourism Industry, Economic Downturn, Crisis Management, Consumer Behavior, Corporate Travel, Leisure Travel, Smart Tourism, Sustainable Tourism, Capital Access, Market Shifts, Economic Stimulus, Risk Assessment, Tourism Infrastructure.
Frequently Asked Questions
What is the primary focus of this paper?
The paper focuses on the 2007-2009 global financial crisis and its specific, far-reaching impacts on the tourism industry and related businesses.
What are the core thematic areas discussed?
The central themes include the origins of the financial crisis, the resulting negative impacts on tourism finance and operations, changes in consumer travel patterns, and emerging growth opportunities.
What is the central research question?
The main research question is: How will the current global economic turmoil affect the tourism industry and associated businesses?
Which scientific methodology does the paper utilize?
The paper employs a hermeneutical research approach, relying on an in-depth interpretation of secondary literature, industry reports, and financial data.
What does the main body cover?
The main body examines the evolution of the financial crisis, analyzes negative impacts like decreased funding and capital access, details changing travel patterns, and explores positive opportunities for recovery.
Which keywords best characterize this work?
Keywords include Global Financial Crisis, Tourism Industry, Crisis Management, Consumer Behavior, and Sustainable Tourism.
How does the crisis specifically impact corporate travel?
The crisis has led to stricter cost containment, reduced frequency of business trips, and a greater emphasis on using video conferencing as a substitute for physical travel.
Why are smaller tourism businesses particularly vulnerable?
Smaller businesses are often more reliant on external bank financing and have limited capital buffers, making them highly susceptible to credit contractions and sudden changes in consumer demand.
- Citation du texte
- Manuel Kaar (Auteur), 2009, A critical analysis of the 2007 - 2009 global financial and economic crisis and its implications for the travel industry and associated businesses, Munich, GRIN Verlag, https://www.grin.com/document/136865
