The current record in domino toppling is 4 491 863 (www.recordholders.org, 31-10-2010)

2007 was the year when the first global financial crisis of the third millennium took off. Three years later the world is still recovering from it. This blog entry will touch upon the impact it had on the tourism industry but stresses out even more the presumed effect the tourism industry itself has on the economy in terms of interdependency. Gabbat (2010) states that the Eyjafjallajokull eruption in Iceland for example is a recent crisis where this interdependency resulted in a cost of €2.5 billion for firms across Europe because airline companies could not provide transport for two weeks.

Sheldon & Dwyer (2010) mention that the impact of the financial crisis was much more muted for tourism than for other industries. Due to the fact that the key products of tourism are perishable and therefore cannot be stored, this industry does not have to go through a severe massive destocking process. However, they mention that there is another side to the medal forming some kind of paradox; “the recovery process might take longer in tourism than in production and trade because there is a no stock-building process going on”. In other words every day sales is more crucial because the next day the product is replaced, whereas imperishable stock eventually can be sold. The metaphor for the economic crisis affecting primary and secondary industries could be an earthquake, while the tertiary sector suffers from the tsunami. Papatheodorou et al. (2010) state that tourism involves discretionary income and has been traditionally considered vulnerable to economic uncertainty and volatility. Thus, it is expected that during tough economic times, people may prefer to keep their cash for the essentials of life such as food, shelter, and family necessities. “Arguably, while tourism in a single economy is likely to remain more vulnerable in the economic downturn, it is believed that collective strategies through collaborations, regional cooperation, and partnership will serve as effective coping strategies for the recovery of inbound and outbound tourism.” (Papatheodorou et al. 2010)

So far so good, crisis solved, but is it? Collaboration is according to Papatheodorou et al. (2010) the solution. Tourism however is an industry which is interconnected with many other industries and collaboration is already the key to survival, but I believe that in this there lies the problem. This interconnectivity could be the reason for economic problems as well.   

There are many countries in the world where tourism is one of the key players for their economy. It seems that the interdependency of tourism with other sectors, especially those who benefit from tourists, forms a danger to these economies where tourism is a main pillar. Chain reactions can result in nationwide economic crises. “There is nevertheless surprisingly little discussion about the ways in which tourism may potentially contribute to financial and economic crisis.” (Hall, 2010). Sinclair (1990) mentioned twenty years ago that tourism may lead to a net increase in the instability of export earnings and be a particular problem in small, open developing economies, where it could potentially worsen economic crises. In his paper Hall (2010) states that overdependency is the major issue. “The seeming increase in the impacts of economic and financial downturns, political instability or natural disasters on tourism are arguably not a result of any increase in such events but instead illustrate the way in which the world’s economies, transport systems and media and communication networks have now become so integrated that when one destination or region has been affected then the impacts can reverberate through the entire system.”

You can conclude that there is something fundamentally wrong with the structure of this world in terms of integration of industries. While the banking sector is generally seen as the first domino piece which fell down, it is the interdependency that caused the crisis to be global influential. Especially the tourism industry, made out of many domino blocks, is a clear example of an industry which affects others when things go terribly wrong.   

References

Gabbat, A. (2010, April 27). Volcanic ash cloud cost European business up to E2.5bn, says EU. The Guardian. Retrieved from http://www.guardian.co.uk/world/2010/apr/27/iceland-volcano-costbusiness-europe

Hall, C. (2010) Crisis events in tourism: subjects of crisis in tourism. Current Issues in Tourism. Vol. 13, No. 5. London: Routledge.

Papatheodorou, Andreas; Rosselló, Jaume; Xiao, Honggen. Global Economic Crisis and Tourism: Consequences and Perspectives. Journal of Travel Research. Vol. 49, Issue 1. London: Sage Publications.

Recordholders: http://www.recordholders.org/en/records/domino-toppling.html (visited 31-10-2010)

Sheldon, Pauline; Dwyer, Larry. The Global Financial Crisis and Tourism: Perspectives of the Academy. Journal of Travel Research. Vol. 49, Issue 1. London: Sage Publications.

Sinclair, M.T. (1990). International tourism and export instability. Journal of Development Studies. 26(3) London: Routledge.