We are living in the year 2010, the era of globalization, a phenomenon that is eliminating all cultural, economical and political borders between the countries and even the continents. Especially the economic situation is affected by this phenomenon. The financial integration, the intercontinental investments and the global companies are reasons that make the economies of the entire world related and dependent to each other.
Since late 2007 the world is facing a very hard economic crisis, which is considered to be the greatest economic breakdown since the Great Depression. Thanks to globalization this financial break down is spread all over the world and is affecting all areas of life. A particular sector that is affected by this economical crisis is tourism as an integrated part of the global economy related to other industries directly and indirectly. The tourism industry is based on the number of travelers and on the expenses that they do for it. With the economic crises people didn’t stop traveling, but they just changed the way they think about it. They don’t look anymore for luxury and for expensive places, instead they prefer cheaper ones because their incomes have decreased. Even those who can’t effort to travel abroad, travel within their own countries. As a result of this, tourism is affected, and since the economic situation has decreased, its effect on tourism is negative.
Another important factor that influences tourism is the financial stability of a country. With the global crises the market is getting more and more insecure, so people try to save more rather than invest. So, tourism will be affected by this attitude of the “tourists”.
All economies, developed, emerging and under developed ones are having serious tourism problems because of this crises. The most affected ones, who were the first to experience the effects of the global financial crises, where those countries which were fully integrated to the world economy. The other countries even though weren’t directly affected by the beginning of this global financial breakdown, now they are dealing with the effects of these crises. Why did developed countries feel the economical crises before the developing countries?
The first countries to be victims of this crisis were the developed ones as USA and the Western Europe where the crises began and have its roots. As a result of this their tourism sector was the first to experience the bad effects of the crises. Tourism is divided in inbound, outbound and domestic tourism. Since the economies of these countries deteriorated rapidly due to these crises, there was an economical downturn in the financial sector, the real estate market and everything else was suffering the consequences. The business was going down and down, a lot of banks and big companies broke down, these lead to a lower number of business tourism and to a lower number of other kinds of inbound and domestic tourism as well.
On the other hand also the other countries were having the same financial problems so the number of travelers from abroad was diminished as well leading to a lower outbound tourism. As a result the overall tourism situation was deteriorated. Since tourism and the economies of a country are closely related and have effects on each other, there was a double effect in the economies. From one side the economical break down caused a lower number of tourists, so to a lower level of incomes from the tourism industry, and on the other hand the deteriorating situation of tourism aggravated more the economic situation of many countries.
An important factor that affected the tourism situation for many countries was their dependence in the developed countries economies. A very good example for this is The Bahamas. About 80% of the visitors and tourists in The Bahamas are from the United States (U.S. Economic Crisis Will Affect Tourism). So, when the number of tourists from US decreased due to the economical problems that US was dealing with, a good portion of the tourism industry was affected, and it was seen a deceleration in the arrival growth in The Bahamas, since the most important part of the tourists was dramatically diminished. Although there are some new constructing tourism plans, according to Mr. Cunningham these project implementation in The Bahamas have been slowed down due to the crises.
Another example for this is Hawaii, whose tourism is also linked to the market of USA. Hawaii is facing a recession due to the financial crises and as a state which relies mostly in tourism, this industry is the most affected one and its effects are directly influencing the overall economy of the country. Lately it is trying different strategies on how to handle with these problems and to raise the island tourism in higher levels, even though it is not expecting to reach its peak level of 2006 of over 7 million visitors till 2012. (The Economist. London: Jan 2, 2010, Pg. 23). A good stimulus was the holidays that the President Barack OBAMA had in Hawaii that is being used as a way to attract tourists, but since holidays in this beautiful island are expensive, with the lowing of the financial incomes, people tend to give up the luxury and expensive things and to focus on cheaper attractive places. Even Hawaii is trying to lower the costs of hotels and even to give free nights, but according to some studies this has taken the revenues of the government and of the hotel chains. (The Economist. London: Jan 2, 2010, pg. 23). According to this article the economy of Hawaii will not improve till the economies of its main markets, as it is USA and Japan become more stable and are reinforced.
As we can see from these two examples, even though The Bahamas and Hawaii, were not directly related and involved to the economic global crises, they still were greatly affected from it due to the dependence that their economy has with other economies and due to their integration to the global economic system.
There are some other countries, which have emerging economies and they didn’t have to handle with the economic crises for a short period. So the process of the crises in these countries started late and had slightly less effects than in the other countries. Since these economies develop more slowly, even the effects of big changes will act slowly. Another reason for this is the low integration to the global economy and the low exposure to the international market. A very good example of this case is Bhutan in South Asia. According to the data report “Impact of Global Financial and Economic crises: Bhutan’s case” by Mr. Phuspalal Chhetri, Bhutan did not experienced a strong impact of the crises, because it is one of the countries that is not fully integrated to the world economy. Being so, it is affected from the global changes after all the other related economies. Another basic reason for this is the financial and integration situation of the main countries in which the Bhutanese economy relies. The Indian market, which is the main country in which Bhutan exports its inflows, is also an emerging country not fully globalised. This made these two countries to have the same life cycle of the crises and so they “helped” each other at the beginning of the crises to handle it pretty well. Although they didn’t directly feel the beginning of this economic downturn, it is sure that they are going to deal with this very soon.
Another example for this is the case of Dubai, which didn’t really feel the crises till lately when he is having a lot of tourism problems like every other country. Dubai was one of the most expensive countries for tourism, it has luxurious seven-star hotels and air conditioned beaches. The economical downturn is making the region suffer the consequences of the global situation and so having a decreased number of tourists. But, since Dubai has a lot of opportunities and a lot of investments which are being used to face this financial crisis, the prognosis for the long term situation is good for this country. This is not only about the tourism resources but also because the state has the economical potential to face the problems because it still has 95% of the reserves and half of the entire Emirates GDP that can be used in the worst situations. (What future for Dubai?)
Some economies even though are deep merged in the global financial crises, are still managing well the tourism industry and are having high levels of it. According to a report about the National Observer of Tourism in Italia, this country tourism is reacting well to the crises comparing it to the other economical factors. Italia has taken some measures to fight the crises and also helped by the nature, because of the beautiful mountains in the winter, the beautiful beaches in the summer and also because of the promotional campaigns for tourist attraction, has maintained to a good level the tourist’s rates. In this way we gave an example on how different politic decisions and a good management of the situation can give better results for the tourism and the overall economy even though the economical crises is deep.
As a conclusion we can say that tourism and the economic global crises are closely related to each other. It is inevitable for every country to have to deal with the effects of the crises, independently if they are related directly or indirectly to it. The tourism industry, as an important sector of every economy cannot be left outside of the current global economic situation. But, even though the number of tourists and visitors will decrease, tourism won’t stop, because people for different reasons will need to travel, if not for pleasure, then for work or different purposes. The only difference is the way they will spend their money. If before the economic crises they could have planned to have luxury holidays than, after the economic crises they will probably prefer cheaper ones, and they will probably prefer domestic tourism instead of going abroad. Economy and tourism are closely related to each other and they cannot change without affecting each other. Different countries are dealing in different ways with the economic crises, some have faced it the first and some others felt it later, but all of them are trying to come out of this economical crises and stimulating tourism industry since it can be very beneficial.
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