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The downturn's aftermath: Experiences gained, lessons learned | By Angelos Loizou, ISHC

17 September 2009

What started in the summer of 2007 as a U.S. subprime mortgages crisis eventually became a liquidity crisis that spread throughout the world and turned into an economic crisis that affected all social classes.

This is precisely the feature that differentiates downturns from crises. During downturns, corrective government interventions are welcomed by the markets. Negative consequences on the broader social classes, if any, are smoothed out relatively quickly in most cases.

On the contrary, when downturns turn into crises, interventions have a more long-term perspective. The impact is immediate and visible at the level of markets and industries and in the daily life of citizens.

The sectors that are affected directly during financial crises or downturns are the construction and property renovation, car and tourism (hospitality and leisure) industries, as well as retail sales (with the exception of the food industry). Yet, while they bear the brunt of the pain during a downturn or crisis, these industries typically emerge with more significant growth rates than the decline rates experience during the downturn.

This economic crisis is still unfolding, and the first safe conclusions for Europe (and especially the countries of the Mediterranean Basin) will be drawn possibly after summer 2010. Regarding the tourism industry, however, we already have observed the manifestation of these negative economic conditions and are able to draw the following general conclusions:

In the three following articles, brief reference will be made to experiences and practices regarding more specific groups of interest in the tourism industry. Commentary and suggestions of the article are based on data and observations relating to countries and territories located mainly in Western and Central Europe, the Balkans and the Mediterranean Basin (South Europe, North Africa and the Middle East).

The next article will explore 10 basic behaviors identified as being fundamental for correct management during crises. The third article will focus on the tourist products of the tourist destinations and the way local societies and central administrations have responded. The fourth and last article will consist of a brief overview of the ways in which economic conditions have affected the profile, trends and behaviors of modern tourists.

Angelos Loizou, ISHC (angelos.m.loizou@cy.pwc.com), a member of the International Society of Hospitality Consultants (www.ISHC.com), is the partner in charge of the Hospitality & Leisure Services division of PricewaterhouseCoopers Limited (www.pwc.com/cy) in Cyprus.

The International Society of Hospitality Consultants, ISHC, is a professional society of 200 members in 22 countries who are leading consultants in the hospitality industry. The Society is dedicated to promoting the highest quality of professional consulting standards and practices for the hospitality industry. Membership is by invitation only. ISHC as an organization represents a one of a kind collection of experience and expertise in the hospitality industry. ISHC members have expertise in over 30 different specialty areas in the hospitality industry and collectively have experience with over 50 hotel companies and nearly 100 brands worldwide. Additionally, ISHC members represent numerous prominent independent hotels throughout the world. ISHC members' clients include domestic and international, public and private hotel owners and investors, many leading financial institutions, Fortune 500 companies, food and beverage service firms, airlines, cruise lines, time share and vacation ownership companies, universities, state, national and international convention, hospitality travel and tourism bureaus.

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