Financial Crisis and Tourism Activity

Abstract

The current recession has hit hard the European countries, and also affected tourism activity throughout the continent. Considering that several European countries (especially the Mediterranean ones) are heavily dependent upon tourism activity, the recent financial crisis has considerably affected their economy. This effect is strengthened with the parallel adoption of austerity measures aiming at economic recovery and exit from the recession. Despite the substantial magnitude and severity of this crisis, little is known about tourists' reactions in coping in with the recessionary effects. Contrary to the established practice of adopting a macroeconomic perspective in the examination of the impact of financial crises on tourism activity, this book chapter follows recent recommendations in the literature such as Brooner and de Hoog (2012) Kaytaz and Gul (2014) to examine the particular adverse effects of the current financial/economic crisis on individual behaviour and demand patterns. Thus, the research utilises a survey questionnaire to British tourists examining the effect of the current recession on travel and consumption patterns. Socio-demographically, the results reveal that the current recession appears to have a significant effect on gender, since male tourism expenditure is affected more than female one. Moreover, the uncertainty associated with income and employment levels during recession has a particularly strong effect on tourism expenditure. More specifically, uncertainty associated with both income and employment levels during the financial crisis has a negative and statistically significant effect on tourism expenditure. On the other hand, younger and middle aged tourists seem to be fairly unaffected by the financial crisis, as compared to more mature and senior tourists. In addition, the findings indicate that future expectations regarding income levels have no influence on current tourism expenditure patterns. Overall, those respondents that were unsure about the effect of the financial crisis on their current tourism expenditure patterns were also more likely to exhibit ambivalence about the future. The findings provide an interesting insight to tourism decision makers since they illustrate evidence regarding the turning points of demand, especially during periods of economic downturn.