ABSTRACT
Economies move in cycles from boom to slump, and occasionally to bust. Demand for travel and tourism services coincides with these economic cycles. Importantly, the entire travel and tourism industry displays extreme sensitivity to the economic and psychological manifestations characterizing the various stages of each cycle. During a period of economic growth, for example, consumer confidence is boosted and people intensify their travel activity. In turn, airlines, hotels, and related tourism businesses prosper. Development forges ahead; new businesses and jobs are created. By contrast, during a bust the opposite occurs. As consumer confidence declines, so does demand. Financial instability of tourism firms intensifies, losses occur and in severe cases, a sector-by-sector industry shake-out is initiated. While a fevered cycle of growth and decline can actually be healthy for an economy, since robust churning purges marginal businesses, recovery is often slow and awkward.
