The Last 5 Recessions and the Impacts on International Travel and the Marketing Strategies That Were Used Successfully By the Travel Sector, In Particular, the Vacation Rental Industry, Hotels, and Resorts


A recession is a macroeconomic term that refers to a significant decline in general economic activity in a designated region. It had been typically recognized as two consecutive quarters of economic decline, as reflected by GDP in conjunction with monthly indicators such as a rise in unemployment. However, the National Bureau of Economic Research (NBER), which officially declares recessions, says the two consecutive quarters of decline in real GDP are not how it is defined anymore. The NBER defines a recession as a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.


  1. High-interest rates: When interest rates rise, they limit liquidity, and money available to invest. In the past, the biggest culprit was the Federal Reserve, which often raised interest rates to protect the value of the dollar. For example, the Fed raised rates to battle the stagflation of the late 1970s, which contributed to the 1980 recession.
  2. Increased inflation: Inflation refers to a general rise in the prices of goods and services over a period of time. As inflation increases, the percentage of goods and services that can be purchased with the same amount of money decreases.
  3. Reduced consumer confidence: Consumers believe the economy is bad, they are less likely to spend money. Consumer confidence is psychological but can have a real impact on any economy. Retail sales are slow. Businesses run fewer employment ads, and the economy adds fewer jobs. Manufacturers cut back in reaction to falling orders—the unemployment rate rises. The federal government and the central bank must step in to restore confidence.
  4. Reduced real wages: Falling real wages means that a worker’s paycheck is not keeping up with inflation. The worker might be making the same amount of money, but his purchasing power has been reduced.
  5. A Stock Market Crash: The sudden loss of confidence in investing can create a subsequent bear market, draining capital out of businesses.
  6. Falling Housing Prices and Sales: As homeowners lose equity, they may be forced to cut back spending as they can no longer take out second mortgages. This was the initial trigger that set off the Great Recession of 2008. Eventually, banks lost money on complicated investments based on underlying home values, which were in decline.
  7. Manufacturing Orders Slow Down: One predictor of a recession is a decline in manufacturing orders. Orders for durable goods started falling in October 2006, long before the 2008 recession hit.
  8. Deregulation: Lawmakers can trigger a recession by removing important safeguards. The seeds of the S&L crisis and subsequent recession were planted in 1982 when the Garn-St. Germain Depository Institutions Act was passed. This removed restrictions on loan-to-value ratios for these banks.
  9. Poor Management: Bad business practices often cause recessions. The Savings and Loans Crisis caused the 1990 recession. More than 1,000 banks, with total assets of $500 billion, failed due to land flips, questionable loans, and illegal activities.
  10. Wage-Price controls: Fortunately, this only happened once. In 1971, President Richard Nixon froze wages and prices to stop inflation. But employers laid-off workers because they weren’t allowed to lower wages. Demand fell since families had lower incomes. Companies couldn’t reduce prices, so they laid off still more workers, causing the 1973 recession.
  11. Post-War Slow Downs: The economy slowed down after the Korean War. This caused the 1953 recession. Similar reductions after World War II caused the 1945 recession.
  12. Credit Crunches: This occurred in 2008 when Bear Stearns announced losses thanks to the collapse of two hedge funds it owned. The funds were heavily invested in collateralized debt obligations. When Moody’s downgraded its debt, banks in a similar over-invested condition panicked. They stopped lending to each other, creating a massive credit crunch.
  13. When Asset Bubbles Burst: Asset bubbles occur when the price of an item, such as gold, stocks, or housing, becomes inflated beyond its sustainable value. The bubble sets the stage for a recession to occur when it bursts.
  14. Deflation: Prices falling over time have a worse effect on the economy than inflation. Deflation reduces the value of goods and services being sold on the market. That encourages people to wait to buy until prices are lower. Demand falls, causing a recession. Deflation caused by trade wars aggravated the Great Depression.
  15. Pandemic Covid-19: According to Real Business Cycle Theory, the spread of the Covid-19 epidemic and the resulting public health lockdowns in the economy in 2020 are examples of the type of economic shock that can precipitate a recession.


Economists determine whether an economy is in recession by looking at various statistics and trends. Factors that indicate a recession include:

  • Rising in unemployment
  • Rises in bankruptcies, defaults, or foreclosures
  • Falling interest rates
  • Lower consumer spending and consumer confidence
  • Falling asset prices, including the cost of homes and dips in the stock market
  • Inverted Yield Curves: An inverted yield curve really means is that most investors believe that short-term interest rates are going to fall sharply at some point in the future. As a practical matter, recessions usually cause interest rates to fall. Inverted yield curves are almost always followed by recessions.

All of these factors can lead to an overall reduction in the Gross Domestic Product (GDP). In the United States, the National Bureau of Economic Research (NBER) tracks multiple economic indicators, including those listed above, to determine whether the US economy is in recession. For example, the NBER declared a recession in the early 1990s, even though the GDP contracted inconsistently over three non-consecutive quarters.


Since the Articles of Confederation – the first US constitution signed in the 18th century – there have been almost 50 recessions in the United States. Through the last 80 years alone, there have been a total of 15 official recessions, including the latest financial crisis, which started in 2007 and ended in 2009.

For an economic decline to be identified as a recession, there has to be a significant downturn in economic activity spread across the economy, lasting more than two quarters, i.e. 6 months. The US National Bureau of Economic Research also states that a recession usually implies negative economic growth, lower employment rates caused by a stop in hiring, lower personal demand, personal spending, company earnings, industrial production, and retail sales.

Major US Recessions in the 20th and 21st Century

After the Second World War, countries, including the US, started to adopt modern economic statistics that included the unemployment rate and GDP, making it significantly easier to spot the early stages of a recession and its effects on economic activity.


The following list shows some of the most important recessions in the United States during the 20th and 21st centuries. However, remember that no recession after World War II has come anywhere near the depth of the Great Depression of 1929, which lasted 3 years and 7 months. The average duration of recessions after 1945 is around 10 months.

Great Depression of 1929

The Great Depression started with the stock market’s collapse in 1929 and was by far the most devastating recession of US history. The economic downturn rapidly spread across the whole country and was followed by a banking panic and a collapse in the money supply, partly because of the commitment to the Gold Standard.

Many companies went bankrupt, and unemployment rates skyrocketed as manufacturers had to lay off workers. While fresh gold inflow led to a larger money supply and a slight economic recovery in the mid-30s, the recession double-dipped in 1937. Looser monetary policy and the consecutive increase in money supply ultimately led to a recovery in the early 1940s. During the Great Depression, the unemployment rate peaked at 24.9 percent, while the economic decline reached 26.7 percent in GDP terms.

The recession of 1973-1975

In October 1973, OPEC countries proclaimed an oil embargo targeted at countries supporting Israel during the Yom Kippur War. The United States was one of the targeted countries, along with Canada, Japan, the Netherlands, and the United Kingdom. The oil embargo caused oil prices to quadruple from $3 to $12 globally, which led to a growth recession and stagflation in the US. Stagflation refers to a combination of a contraction in economic activity coupled with high inflation.

Early 1990s Recession

The early 1990s recession was a brief economic downturn caused by a number of factors, including a rate hike cycle by the Federal Reserve from 1986 to 1989, the 1990 oil price shock, growing pessimism among US consumers, and accumulating debt. The 1990s recession lasted 8 months, with the unemployment rate peaking at 7.8% and the GDP declining by 1.4%.

Early 2000s Recession

Another shallow recession happened in the early 2000s. After a long period of growth in the United States during the 1990s, the 2000s recession emerged with the collapse of the dot-com bubble, falling investments, and the September 11th attacks, which led to a fall in the GDP of 0.3%.

Great Recession of 2007-2009

The great recession of 2007-2009 was a widespread global financial crisis that began with the subprime mortgage crisis in the United States and spread soon across the world even as oil and food prices soared. Many housing-related assets experienced a free-fall, which led to major problems and bankruptcies in some of the most important financial institutions in the United States, such as Fannie Mae, Freddie Mac, Citi Bank, AIG, Lehman Brothers and Bear Stearns.

The government injected a breathtaking $700 billion bank bailout and a $787 billion fiscal stimulus package to stabilize the US financial market. The increase in government spending is a typical Keynesian solution to a recession, which – according to the theory – should stimulate aggregate demand and cause the GDP to rise.

Great Lockdown

In response to the worldwide coronavirus pandemic, most of the United States instituted some form of social distancing that seriously reduced economic activity and caused the highest spike in unemployment since the Great Depression. Before this, a fall in oil prices because of new Natural Gas Fracking and years of low-interest rates led to an overall decline in effective demand. After several months of shelter-in-place orders, people began defaulting on non-performing and otherwise safe loans, leading to a significant financial crash.


  1. Recession Impacts on Large Business: An unnamed Fortune 1000 manufacturer suffers from the effects of a recession. What happens to this firm will likely happen to other big businesses as the recession runs its course. As sales revenues and profits decline, the manufacturer will cut back on hiring new employees or freeze hiring entirely. In an effort to cut costs and improve the bottom line, the manufacturer may stop buying new equipment, curtail research and development, and stop new product rollouts (a factor in the growth of revenue and market share). Expenditures for marketing and advertising may also be reduced. These cost-cutting efforts will impact other big and small businesses that provide the goods and services used by the big manufacturer.
  1. Falling Stocks and Slumping Dividends: As declining revenues show up on its quarterly earnings report, the manufacturer’s stock price may decline. Dividends may also slump or disappear entirely. Company shareholders may become upset and call for the appointment of new company leadership and the board of directors. The manufacturer’s advertising agency may be dumped and a new agency hired. The internal advertising and marketing departments may also face a personnel shakeup.

When the manufacturer’s stock falls, and the dividends decline or stop, institutional investors who hold that stock may sell and reinvest the proceeds into better-performing stocks. This will further depress the company’s stock price. The sell-off and business decline will also impact employer contributions to profit-sharing plans or 401(k) plans if the company has such programs in place.

  1. Credit Impairment and Bankruptcy: A recession will also dampen a company’s accounts receivable (AR). Customers who owe the company money may make payments slower, later, or not at all. Then, with reduced revenues, the affected company may be forced to pay its own bills slower, later, or in smaller increments than its original credit agreement required. Making late or delinquent payments will reduce the valuation of a corporation’s debt, bonds, and ability to obtain financing. The company’s ability to service its debt (pay interest on the borrowed money) may also be impaired, resulting in defaults on bonds and other debt and further damaging the firm’s credit rating.

On the other end of a recession, a company’s debt may need to be restructured or refinanced, meaning new terms will have to be agreed upon by creditors. If the company’s debts cannot be serviced and cannot be repaid as agreed upon in the lending contract, then bankruptcy may ensue. The company will then be protected from its creditors as it undergoes reorganization, or it may go out of business completely.

  1. Employee Lay-Offs and Benefit Reductions: The business may cut employees, and more work will have to be done by fewer people. Productivity per employee may increase, but morale may suffer as hours become longer, work becomes harder, wage increases are stopped, and fear of further layoffs persists.

As the recession increases in severity and length, management and labor may meet and agree to mutual concessions to save the company and jobs. The concessions may include wage reductions and reduced benefits. If the company is a manufacturer, it may be forced to close plants and discontinue poorly performing brands. Automobile manufacturers, for example, have done this in previous recessions.

  1. Cuts to Quality of Goods and Services: Secondary aspects of the goods and services produced by the recession-impacted manufacturer may also suffer. To cut costs to further improve its bottom line, the company may compromise the quality, and thus the desirability, of its products. This may manifest itself in various ways and is a common reaction of many big businesses in a steep recession.

Airlines, for example, may lower maintenance standards. They may install more seats per plane, further cramping the already squeezed-in passenger. Routes to marginally profitable or money-losing destinations may be cut, inconveniencing customers and damaging the economies of the canceled destinations.

Giant food purveyors may offer fewer products in the same size package for the same price. Food quality may also be cut, compromising flavor and driving away cost-conscious consumers with little brand loyalty who will likely notice the change.

  1. Reduced Consumer Access: As firms impacted by the recession spend less on advertising and marketing, big advertising agencies that bill millions of dollars annually will feel the squeeze. In turn, the decline in advertising expenditures will whittle away at the bottom lines of giant media companies in every division, be it print, broadcast, or online. As the effects of a recession ripple through the economy, consumer confidence declines, perpetuating the recession as consumer spending drops.
  1. Recession Impacts on Small Businesses: Small, private businesses with annual sales substantially less than the Fortune 1000 actually perform fairly similarly to large businesses during a recession. Without major cash reserves and large capital assets as collateral, however, and with more difficulty securing additional financing in trying economic times, smaller businesses may have a harder time surviving a recession. Bankruptcies among smaller businesses typically occur at a higher rate than among larger firms.

The bankruptcy or dissolution of a small business that serves a community — a franchised convenience store, for example — can create hardships not only for the small business owners but also for residents of the neighborhood. In the wake of such bankruptcies or dissolutions, the entrepreneurial spirit that inspired someone to go into such a business may take a hit, discouraging any risky business ventures at least for a while. Too many bankruptcies may discourage banks, venture capitalists, and other lenders from making startup loans until the economy turns around.

  1. Travel: According to Zagat‘s 2009 U.S. Hotels, Resorts & Spas survey, business travel has decreased in the past year as a result of the recession. 30% of travelers surveyed stated they travel less for business today while only 21% of travelers stated that they travel more. Reasons for the decline in business travel include company travel policy changes, personal economics, economic uncertainty and high airline prices. Hotels are responding to the downturn by dropping rates, ramping up promotions and negotiating deals for both business travelers and tourists.

According to the World Tourism Organization, international travel suffered a substantial slowdown beginning in June 2008, and this declining trend intensified during 2009, resulting in a reduction from 922 million international tourist arrivals in 2008 to 880 million visitors in 2009, representing a worldwide decline of 4%, and an estimated 6% decline in international tourism receipts. The decline caused by the recession was further exacerbated in some countries due to the outbreak of the AH1N1 virus.


Impacts of the Great Recession of 2007-2009 on International Travel

Much has changed in the travel industry since 2008. According to Zagat‘s 2009 U.S. Hotels, Resorts & Spas survey, business travel has decreased in the past year due to the recession.

According to the World Tourism Organization, international travel suffered a substantial slowdown beginning in June 2008, and this declining trend intensified during 2009, resulting in a reduction from 922 million international tourist arrivals in 2008 to 880 million visitors in 2009, representing a worldwide decline of 4%, and an estimated 6% decline in international tourism receipts. The decline caused by the recession was further exacerbated in some countries due to the outbreak of the AH1N1 virus.

In the immediate aftermath of the crisis,

  1. Consumers pulled back on discretionary spending,
  2. Canceling or downsizing planned vacations;
  3. Businesses tightened their belts and cut corporate travel expense accounts.
  4. Travel stocks got hit even worse. An investor who bought the S&P 500, a widely followed stock index that tracks the 500 largest U.S. businesses, in January 2007 would have lost half of their money by March 2009, the low point for stocks. Over the same time frame, airline stocks declined 68 percent, while hotel, resorts, and cruise lines fell 74 percent.
  5. Hotels, motels, and casinos collectively shed 144,000 workers in 2008 and 2009.
  6. High airline prices: Fares are 15 to 25 percent higher on many routes than they were a year ago.
  7. In 2007, U.S. hotels generated $66 in sales for every room they offered travelers. This metric, revenue per available room (RevPAR), is used by many hoteliers as a short-hand to measure overall performance since it is a function of both how many available rooms a property can book (occupancy rate) with how much it charges for those rooms (average daily rate, ADR). In the depths of the recession, U.S. hotel financial performance plummeted, generating an industry-wide $54 of sales for each available room, down 18 percent.
  8. Airlines were barely profitable before the Great Recession. Of course, the global financial crisis did not help, and in the depths of the recession, the U.S. industry lost a collective $24 billion, a margin of negative 13 percent.

Hotels are responding to the downturn most of the time:

  1. Dropping rates,
  2. Ramping up promotions and
  3. Negotiating deals for both business travelers and tourists.

Historical events and how tourism has bounced back

Amid the COVID-19 Coronavirus Pandemic, it’s easy to forget that the global economy and tourism industry has experienced similar significant events in the past. Whether it’s flu pandemics, political instability, economic recession, natural disasters, terror threats or war, the tourism industry is no stranger to the economic downturn and the adversity surrounding each event.

The Global Financial Crisis 

From 2007 to early 2009, the world was plunged into the deepest economic recession since the Great Depression in the 1930s. Tourism was one of the first industries to be affected as people worldwide cut back on luxury expenditure. All sectors of the travel industry felt the effects, with airline stocks declining 68%, and hotel, resorts and cruise lines falling up to 74%.

The industry shake-up resulted in major hotel chains and airlines being forced to restructure and consolidate. This resulted in a surge of growth in both of these significant industries following the Global Financial Crisis (GFC), with higher margins and consumer demand to match. 

Research conducted throughout the 10 years following the GFC shows that the new airlines, hotel chains, and online booking accessibility due to the recession have massively impacted outbound travel in emerging markets. Before the GFC, China, India, and Latin America made up just 21% of outbound travelers; as of 2016, data from the World Bank shows that they now make up 41% of outbound travelers. Researchers now believe that thanks to the GFC, travel is a much more accessible and desired activity for people across the globe

The disruption of the tourism industry and the emergence of a more frugal traveler demographic paved the way for the fragmentation of the online travel industry. Expedia and continued to grow in the wake of the recession, and online booking sites such as Airbnb were launched. While these emerging technologies took some business away from tour operators, the positive impacts they had on tour operators far outweighed the negative. Travel was thrust into the limelight and was suddenly desired by a broader spread of consumers across a wider array of socio-economic backgrounds

So, while many business owners would argue that the Global Financial Crisis was the most significant economic disruption of the past decade, research shows that despite the turmoil the tourism industry faced, it has, in many ways, become better off. 

2009 H1N1 Pandemic (Swine Flu)

You’ll probably remember the H1N1 pandemic that swept worldwide in 2009 and 2010. This influenza strain, sometimes referred to as Swine Flu, caused just over 200,000 fatalities worldwide, and it is estimated

that economic losses ranged between 0.5% and 1.5% of GDP in affected countries. 

Economists expected tourism to be hit hard by the H1N1 Pandemic, but subsequent research has revealed that the ever resilient tourism industry was not impacted as hard initially anticipated, with an estimated 8.5% fall in international travel and a 6% fall in domestic travel. Many experts also believe the economic impact was greatly reduced due to the improved level of preparedness compared to past pandemics.

So, while many business owners would argue that the Global Financial Crisis was the greatest economic disruption of the past decade, research shows that despite the turmoil the tourism industry faced, it has, in many ways, become better off. 

2009 H1N1 Pandemic (Swine Flu)

You’ll probably remember the H1N1 pandemic that swept around the world in 2009 and 2010. This influenza strain, sometimes referred to as Swine Flu, caused just over 200,000 fatalities worldwide and it is estimated that economic losses ranged between 0.5% and 1.5% of GDP in affected countries. 

Economists expected tourism to be hit hard by the H1N1 Pandemic, but subsequent research has revealed that the ever resilient tourism industry was not impacted as hard initially anticipated, with an estimated 8.5% fall in international travel and a 6% fall in domestic travel. Many experts also believe the economic impact was greatly reduced due to the improved level of preparedness compared to past pandemics.

War and political instability

War and political instability is notorious for having a direct impact on the tourism and hospitality industries. Similar to the GFC, the hardest hit sectors within tourism are often hotels and airlines. 

In recent history, the Iraq War in the early 2000’s resulted in a sharp decline in bookings, a trend which was reflected in the earlier 1991 Gulf War. In both cases, the tourism industry bounced back faster and more positively than it’s pre-war position.

A new trend of ‘short stays’ emerged during the Iraq War, destinations such as New Zealand and Vietnam grew in popularity following the Gulf war, and consumer confidence surged following both wars which had a positive knock of effect for the entire global economy.

SARs – Severe Acute Respiratory Syndrome

SARs swept around the world from 2002 to 2004, costing an estimate of$54 Billion for the global economy. Despite being one of the most significantly impacted industries, the travel market rebounded to levels similar pre SARs outbreak just 3 months after the crisis peak.

There’s no doubt that the global tourism industry has seen its fair share of tough times. But history and subsequent research continue to show how resilient the tourism industry is. In most cases, tourism has bounced back and even improved following significant economic adversity.


During recessions, consumers set stricter priorities and reduce their spending. As sales drop, businesses typically cut costs, reduce prices, and postpone new investments.

The first step in responding must be understanding the new customer segments that emerge in a recession. Marketers typically segment according to demographics (“over 40,” say, or “new parent” or “middle income”) or lifestyle (“traditionalist” or “going green”). Think of your customers as falling into four groups:

  1. The slam-on-the-brakes segment feels most vulnerable and hardest hit financially. This group reduces spending by eliminating, postponing, decreasing, or substituting purchases. Although lower-income consumers typically fall into this segment, anxious higher-income consumers can as well, particularly if health or income circumstances change for the worse.
  2. Pained-but-patient consumers tend to be resilient and optimistic about the long term but less confident about the prospects for recovery in the near term or their ability to maintain their standard of living. Like slam-on-the-brakes consumers, they economize in all areas, though less aggressively. They constitute the largest segment and include the great majority of households unscathed by unemployment, representing a wide range of income levels. As news gets worse, pained-but-patient consumers increasingly migrate into the slam-on-the-brakes segment.
  3. Comfortably well-off consumers feel secure about their ability to ride the economy’s current and future bumps. They consume at near-prerecession levels, though now they tend to be a little more selective (and less conspicuous) about their purchases. The segment consists primarily of people in the top 5% income bracket. It also includes those who are less wealthy but feel confident about the stability of their finances—the comfortably retired, for example, or investors who got out of the market early.
  4. The live-for-today segment carries on as usual and, for the most part, remains unconcerned about savings. The consumers in this group respond to the recession mainly by extending their timetables for making major purchases. Typically urban and younger, they are more likely to rent than to own, and they spend on experiences rather than stuff (except consumer electronics). They’re unlikely to change their consumption behavior unless they become unemployed.

Regardless of which group consumers belong to, they prioritize consumption by sorting products and services into four categories:

  • Essentials are necessary for survival or perceived as central to well-being.
  • Treats are indulgences whose immediate purchase is considered justifiable.
  • Postponables are needed or desired items whose purchase can be reasonably put off.
  • Expendables are perceived as unnecessary or unjustifiable.

During downturns, marketers must balance efforts to pare costs and shore up short-term sales against investments in long-term brand health. Streamlining product portfolios, improving affordability, and bolstering trust are three effective ways of meeting these goals. 


Consider tactics for optimizing systems, building relationships, boosting loyalty, and preserving long-term guest value.  Here are our top strategies, according to Navis blog for facing the tough times ahead.

    1. Turn to technology    

With technology, companies can grow their number of leads (guests that have previously inquired but do not have an existing reservation), add efficiency, support a remote workforce, and create future direct booking opportunities. They can also reduce knee-jerk pricing and strategies with data-driven decisions. Here are five ways to harness and nurture direct demand to improve operations.

Unleash automated marketing programs. Resource cuts can devastate marketing for hotels or VRMCs dependent on manual tactics, like Excel-based list exports and email blasting. Instead, deploy smart automation to maintain campaign continuity – even under resource constraints. Stay relevant and build relationships through personalized lapsed-guest emails, booking anniversary notifications, pre-departure re-booking emails, and promotional emails sent without manual effort.


Capture unbooked leads. Second-chance bookings and retargeting open new revenue paths. For example, consider a shopping cart abandonment strategy to capture and engage website visitors who didn’t book. This turns booking engine data into valuable leads. NAVIS’ research shows that abandonment solutions generate 3 to 5 times the number of leads available for voice and email remarketing versus booked guests. One NAVIS client, Banyan Tree Mayakoba, reported $2,930 in revenue per booking on 38% conversion from their shopping cart abandonment leads.

 –Spotlight your key metrics. In lean times, ongoing data monitoring is critical to ensure healthy RevPAR performance. Kim Snow, Vice President Revenue Strategy at Interstate Hotels & Resorts, believes that utilization of daily regrets/denials reporting must become a daily habit, stressing, “These insights hint to where you’re succeeding and where you have opportunity.” NAVIS clients may know this report as the Nightly Lead Demand report, highlighting their unconstrained demand. It allows them to pivot in real time if the market pushes back against a rate or policy. Conversely, if guests don’t resist rates, the opportunity to drive ADR without a decrease in occupancy may surface.

 Optimize for remote working & outsourcing. Disruptions to daily operations – whether from a natural disaster or social distancing – add a premium to remote work capabilities. Here, brands often struggle with live call reservation workflows and staffing. One NAVIS client, Jamaica Inn, opted for a virtual phone solution after a local carrier struggled to route calls in a heavy storm season. Outsourced reservations support is an investment that reduces call disruptions, adds scale, and supports after-hours or overflow calls – especially in virtual work environments. 

Use the slowdown for setup. Peak season may not be the time for software integrations and system overhauls. Consider platform, training, or email marketing upgrades during a lull. This allows easy implementation and ramp-up in anticipation of a market recovery. 

    1. Reach out to past guests

At the recent conference, Navigate 2020, Matthew Libby, Director, of Revenue & Central Reservations at Kohler Company, reminded hotels and VRs to understand what drives loyalty in repeat guests. Brand and property differentiators need emphasizing during a slowdown. “Appeal to your most loyal segments through what they love about your property, not rate,” he guides.

    1. Target in-house and near term travelers

Existing business is ripe for future bookings and upselling. Consider targeted promotions to extend the stay of already booked guests, or those with check-ins in less than two weeks. Ideally, avoid explicit rate cuts and focus on service or amenity upgrades. Add automated email upsell or cross-sell promotions to new bookings too.

    1. Expand revenue sources/ Assess opportunities

Future-proofing means diversifying revenue sources. At Navigate, Libby recalled the over-dependence on golf at one of his properties. The team studied popular trends and made simple investments to widen interest outside the golf community. They added wellness activities like yoga and Bold Cycle, a boutique indoor cycling studio. They also capitalized on the ‘local first’ phenomena and introduced locally-sourced amenities to capture new segments and cash flows.

    1. Keep on marketing

Marketing communication costs can be trimmed more quickly than production costs without letting people go. In managing their marketing expenses, however, businesses must distinguish between the necessary and the wasteful. Building and maintaining strong brands—ones that customers recognize and trust—remains one of the best ways to reduce business risk.

    1. Cut loose poor performers and eliminate low-yield tactics.

Surgically trimming the budget is easier to do during a downturn than in prosperous times. Tough times are imperative to cut loose poor performers and eliminate low-yield tactics. When survival is at stake, getting companywide buy-in for revising marketing strategies and reallocating investments is easier. The challenge is to make well-defended, case-by-case recommendations about where to cut spending, hold it steady, and even increase it.

    1. Digital marketing strategy

Take this opportunity to give your travel website a health check, ensure your website security is up to date, work on your SEO, focus on your social media presence, and take time to review your digital marketing strategy.  Internet advertising in particular, is targeted and relatively cheap, and its performance is easily measured. Despite a deepening recession, marketers spent 14% more on online ads over the first three quarters of 2008 than they did over the same time frame in the previous year. Another factor driving this growth in digital-ad spending is consumers’ migration to online social media such as MySpace, Facebook, and LinkedIn, which help people intensify networking efforts amid layoffs and a tough job market. The new-member sign-up rate at LinkedIn, a site that focuses on professional networking, has doubled in the past year.

    1. Training

More thrust on training, preventive maintenance, multi-skilling, employee exposure, cross-training and such measures that are non-financial and would enhance guest satisfaction should be considered for the few people that would have remained after staff retrenchment.

    1. Look at Various Income Opportunities

Look into new streams of income by offering high-demand services or facilities. For example, start offering many property-related services that increase overall income and provide value to tenants. These can include coordinating housekeeping services, dog-walking services, or others. Maximizing income from cash flow properties is crucial during a downturn.

    1. Reduce Costs for Tenants

Cutting costs for tenants is one of the best things you can do to recession-proof your rental property. Aside from monthly rent payments, tenants also have to contend with electricity, water, and heating bills, all of which chip away at their paycheque. You can do many things as a landlord to cut these costs and increase tenant satisfaction. Reduced costs will undoubtedly be appreciated during a recession.

Installing higher-grade windows, for example, can significantly impact your tenants’ heating bills. Many property owners are switching to solar panels to save on utility costs. Survey your rental property to see where cost-saving improvements can be made and recession-proof your property for years to come.

    1. Get Long-Term Lease Agreements in Place

The best way to recession-proof your rental property is to ensure it will provide a steady and consistent income stream. In the lead-up to a recession, it may be wise to negotiate long-term lease agreements with tenants. In exchange for commitment and consistency, consider offering slightly lower rental rates. This may lead to slightly lower income overall, but it can mean that you sail through the recession without a second thought, as your income is secured with a long-term lease. A good lease agreement can mitigate many risks in real estate investing and make your rental property recession-proof. 

India Example

India during the great recession of 2007-2009 from the US that affected India as well, this is how the hotel Industry coped with the recession:

The economic slowdown and the battering tourism had called for some smart house-keeping, and five-star hotel chains in the country were trying their best to behave like prudent housewives. They cut costs without being seen as reducing customer amenities. Le Grand Meridien, Bangalore had Less number of flowers in restaurants and less number of Bathroom towels in the guest rooms. The number of writing pad sheets kept in rooms and conference rooms had less pages. Newspapers delivered to guest rooms were ordered only according to occupancy.

At the hotel, pressure-reducing valves were inserted in taps in all public areas, particularly the kitchens, because stewards and cooks didn’t always close the taps “each time they washed a plate.” This saved about 30% of the water consumed. Similarly, LED lights in the lobby and public areas saved 70 percent of electricity consumption, and auto flush systems in the restroom saved up to 40 percent of water.

Heating a swimming pool on the other hand, in winter, costs Rs 20,000 each time. So every time you avoid heating it, you make a substantial saving too. Manpower was trained in the need to conserve energy and water (taps with sensor even in staff lockers, not just guest bathrooms) and even food in the staff cafeteria. Provisions were made for the corridor lights for automatic switch on or off upon detecting human presence.


Across North America and Europe, four to five million households own vacation homes and rent them out regularly. Many of these vacation homes were purchased with debt, so there is a monthly drain on the household to keep making payments and pay maintenance costs during these tough economic times. During the last several years, to help pay the mortgage and keep the property, many vacation homeowners have turned to rent out their homes to vacationers. The arrangement is nearly always a win-win for the vacation homeowner and traveler.

Selecting your vacation home’s location wisely may not protect you entirely from seeing a drop in value during a recession, but it could mean that the decrease you see is much smaller than it would be elsewhere.

During the past recessions vacation rental industry performed very well, like in the US because for the following reasons:

1. Second homeowners who don’t usually rent their homes put them in the rental pool

With a lack of home buyers in the marketplace and mortgages that need to be paid, owners of vacation properties have historically added their second homes to the rental market to supplement lost income from other investments. In the last recession, US leisure markets also saw an increase in the number of property management service providers and in the number of homeowners deciding to rent by owner instead of a property manager.

2. Leisure markets in the U.S. are fed by repeat travelers and drive-to markets

When making vacation decisions during a recession, travelers sought out ease, comfort, and value. Leisure vacation rental markets checked these boxes. Familiar destinations are easily accessible, provide relaxation and comfort, and offer a more affordable vacation option that experienced increased popularity during past recession periods.

3. Domestic travel upstages international travel

Historically in recession periods, leisure travelers in the US have opted for domestic travel over international travel. As a lower-cost alternative, domestic leisure vacations were preferred over overseas travel between 2008 and 2010.

4. In the last recession, travelers gravitated to family travel in vacation homes

While the industry hasn’t performed adequate research on the subject, there appeared to be a psychological phenomenon during the last recession that drove vacationers to opt for family travel. One of the most significant growth periods in the vacation rental industry occurred between 2006 and 2012 as second homeowners entered the rental market, and many turned professional and built vacation rental management companies on their own. Besides the growth in local destinations, Airbnb was founded in 2008, and Vacasa was founded in 2009.

5. Vacation rental management companies have asset-light business models

As service businesses, vacation rental management companies in leisure markets do not operate with heavy assets. As a result, vacation rental management companies can pivot as consumer needs shift.

Examples of Hotels That Survived The Great Recessions

Deutsche Hospitality and Steigenberger Hotels AG

The recession led to the rise of online travel agencies. Hotels started to give high inventory volumes to OTAs’ distribution to drive volumes, and because of that, the distribution landscape was able to excel. After the recession, the interest rates were taken down, which resulted in an increased interest in investors in the hospitality industry. Markets are swamped with new rooms/supply, again a strain on rates and thus profitability.

Northern Powerhouse Developments Hotels

The greatest lesson is to be prepared. Establish contingencies for numerous ‘What if?’ scenarios. Be adaptable and embrace change. Excellent planning includes flexibility at all levels. When implemented with sensitivity and empathy, our industry has proven to be extraordinarily resilient. Time after time.


The brands which have dominated over the past decade share a common thread. Customers have more and more choices in buying decisions, and providing a frictionless, personalized booking experience with seamless technology has been key to driving loyalty.

Individual economies have ebbed and flowed, but nurturing long-term partnerships with owners who share our vision has been critical and something we continue to place great importance on.

Herald Hotels

As stated by James Devitt the managing director, the most significant change they have seen from a United Kingdom perspective is changing the debt market, influencing hoteliers’ attitude to debt. The sources of debt have widened as traditional lending sources were forced to retrench, and new lenders have come forward. The leading U.K. and Irish banks no longer dominate hotel lending to the same extent. By ‘hoteliers,’ I refer to hotel owners rather than international hotel operators, who, in the main, no longer own or control the assets, another fundamental change in the industry.

Examples of Rental Houses that were created after the recession

Airbnb founded in 2008

Brian Chesky and Nathan Blecharczyk founded Airbnb during the 2008 recession and are very young. CFO Laurence Tosi, on the other hand, has been through three recessions in his career (1992, the 2000s, 2008). Depending on his specific experience of those recessions, having someone like him at the financial helm of Airbnb may undoubtedly help the company weather any future storms.

The marketplace model has few fixed costs. Airbnb isn’t burdened with physical inventory that it needs to shift. The most significant fixed-like cost is its staff. So long as Airbnb can meet its customers’ needs and be reasonably nimble around staffing, it will probably do fine in a recession. People will continue to travel, seek out temporary accommodation that meets their needs, and want their money to go as far as possible. People will want to optimize the use of their assets and make extra money. Airbnb customers and users will want lots of feedback and data to help them make these decisions. If Airbnb can deliver on these needs and maintain a top position in their industry, it will help them survive a recession.

Vacasa founded in 2009

In 2009, after assuming responsibility for his wife’s family Pacific Northwest vacation home, founder Eric Breon struggled to find a property manager capable of providing quality care and a satisfying financial return. This international vacation rental management company is based in Portland, Oregon, United States. It provides property management services for over 24,000 vacation rentals in the U.S., Europe, Central and South America, and South Africa. Vacasa manages properties in 31 U.S. states and 17 countries.

Inspired by the success of Airbnb, which has now raised a cumulative $3.3 billion of capital, a new generation of startups has entered the vacation rental market. The startup-focused website AngelList has tracked 400 new vacation rental startups since 2011; we suspect that number is an underestimation.


In most cases, governments can mitigate and reverse downturns by printing more money, then effectively loaning it out at low-interest rates. These lower interest rates make it easier for households and businesses to borrow money from banks. In turn, the additional loans banks can inject more money into the economy, thereby allowing it to recover from the recession.


Recession is inevitable, and the travel and hotel industry also gets its impacts. Every business needs to be prepared for a recession like the current great lockdown facing the world. The only companies that shall survive are those highly prepared to handle the recession positively in these challenging times.