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 - Miscellaneous, grade: 1, University of applied sciences, language: English, abstract: There have been numerous incidents in one or more countries in the past that ledto sudden and unexpected reductions in demand for tourism services andconfronted travel businesses with an economic environment of high uncertainty.However, the current financial and economic crisis appears to be of a largerdimension than most other crises before, and numerous experts around the globeagree that the present economic slowdown has the potential to become one of themost challenging and transformational disturbances on a supranational level sincethe Great Depression. Predictions of future developments are vague and can onlybe educated speculation at best, yet for the tourism industry the initial effects ofthis first major crisis of the globalization era are already clearly perceptible.Drawing on an extensive review of already existing literature, this paper explainsthe various milestones during the period that led to the 2007-2009 global financialand economic disorder, and subsequently considers a choice of selected keyimplications for the tourism industry and associated businesses. The aim of thispaper is therefore to provide an academically substantiated reference guide formarket participants and policy-makers alike, with the ultimate purpose of making acontribution to reduce the number of cases where wrong decisions lead to majordifficulties or even the failure of a destination or an individual business.Results of the research indicate that the identified impacts are likely to intensifythroughout 2009 and 2010, and that the crisis will most likely also entailfundamental changes for the industry on a long-term basis. In particular, it wasfound that in the medium term decreased public funding for tourism projects andrestricted access to capital are likely to force many travel businesses into seriousliquidity problems. This may cause a series of reactions, including widespreadworkforce reductions and severe cuts in the quality of the provided services.Besides, the crisis is likely to have considerable effects on the way leisure andcorporate travel is conducted, as for instance shorter and less frequent trips or astronger tendency towards cost containment. However, the paper also points outthat every crisis embodies a great number of opportunities and provides ananalysis of a range of selected chances for destinations and tourism businesses.