A critical analysis of the 2007 - 2009 global financial and economic crisis and its implications for the travel industry and associated businesses

Bachelor Thesis from the year 2009 in the subject Tourism, grade: 1, University of applied sciences, language: English, abstract: 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.