Journal of Hospitality and Tourism Management 38 (2019) 27–38

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Journal of Hospitality and Tourism Management

journal homepage: www.elsevier.com/locate/jhtm

The impact of crises on hotel rooms' demand in developing economies: The T

case of terrorist attacks of 9/11 and the global financial crisis of 2008
Marketa Kubickovaa,∗, Destan Kirimhanb, Hengyun Lic
a
University of South Carolina, School of Hotel, Restaurant and Tourism Management, 701 Assembly Street, Columbia, SC, 29208, USA
b
University of South Carolina, Darla Moore School of Business, 1014 Greene Street, Columbia, SC, 29208, USA
c
The Hong Kong Polytechnic University, School of Hotel and Tourism Management, 17 Science Museum Road, TST East, Kowloon, Hong Kong

A R T I C LE I N FO A B S T R A C T

Keywords: The terrorist attacks of 9/11 and the financial crisis of 2008 had a considerable impact on the hospitality
Developing economies industry around the World. Using monthly STR hotel data for Honduras and Costa Rica, this study investigates if
Hotel industry differences exist among these two countries and their impacts on the hotel industry. The results indicate that the
Crisis two crises are not the same, impacting Costa Rica more negatively then Honduras. In addition, the crisis of 2008
Strategic management
had a more negative impact than the 9/11 crisis, highlighting the differences between the crises. The tourists'
origin, mode of transportation, hotel segment, the level of tourism development and institutional environment
may have some influence on how destinations respond to crises. This study provides numerous managerial and
empirical implications.

1. Introduction levels (Okumus & Karamustafa, 2005).

The terrorist attacks of 9/11 and the global financial crisis of 2008
had a considerable impact on hospitality and tourism services. Since
tourism is often seen as a discretional consumer good, it tends to be
more affected by adverse economic conditions than other sectors (Song
& Lin, 2010). The conventional view is that shocks (crises) are dama-
ging to the industry's revenue. Since hotel expenses make up the largest
portion of tourist expenditure, it is expected for hotel companies to feel
such impact, reflected in hotel occupancy, rates, and overall hotel
performance (Chin, Wu, & Hsieh, 2013).
With this in mind, governments cannot afford to neglect the hotel
industry and the impact crises have on the industry. As Nunkoo (2015)
points out, government plays a central role in tourism development and
planning through formal ministries and other institutions, such as local
governments. Any major shocks to the key pillar of an economy, such as
hospitality, would not only have a negative impact on residents but
could influence the government's balance sheet (Solarin, 2016). Com-
munities that experience economic recession go through substantial
changes as disposable income is reduced, industries close, and the
workforce shrinks due to emigration (Stylidis & Terzidou, 2014).
Therefore, it is not a surprise that governments are interested in the
impact crises may have on their destination. Furthermore, crisis man-
agement should be incorporated into a country's overall tourism plan-
ning, marketing, and management strategies on national and regional
Previous literature shows that differences exist among countries in
terms of how they respond to crisis and the impact crises have on
tourism industry. For example, a Chen, Kim, and Kim (2005) study
indicates that the terrorist attacks of 9/11 significantly hurt Taiwanese
hotel stock returns and had a direct impact on sales and earnings per-
formance of hotel firms. However, it is also possible that the impacts of
environmental shocks are overstated. In this sense, an environmental
shock can be defined as a rapid, often unforeseen, changes in country's
external environment (Marino, Lohrke, Hill, Weaver & Tambunan,
2008).
It can be reasoned that some hotel firms are able to absorb this type
of environmental uncertainty and adjust within a short period of time
(Kosová & Enz, 2012). As Naudé (2009) concludes, there may be some
destinations that may be either less affected, recover sooner than ex-
pected, or even avoid recession entirely. Therefore, the main purpose of
this research is to investigate if differences exist in the impacts these
crises have on the hotel industry.
Specifically, the case of the terrorist attacks of 9/11 and the fi-
nancial crisis of 2008 are being investigated. These two crises were
utilized as previous literature has highlighted the impact these events
had on tourism in the World. The crises not only influenced concerns
when it comes to guests' security and protection of tourism and hos-
pitality property, but also change the way a business is being conducted
today. In addition, it can be argued that these crises were global, thus,

∗
Corresponding author.
E-mail addresses: kubickova@hrsm.sc.edu (M. Kubickova), kirimhan@email.sc.edu (D. Kirimhan), hengyun.li@polyu.edu.hk (H. Li).

https://doi.org/10.1016/j.jhtm.2018.10.002
Received 16 April 2018; Received in revised form 8 August 2018; Accepted 4 October 2018
Available online 11 December 2018
1447-6770/ © 2019 Published by Elsevier Ltd on behalf of CAUTHE - COUNCIL FOR AUSTRALASIAN TOURISM AND HOSPITALITY EDUCATION
M. Kubickova et al. Journal of Hospitality and Tourism Management 38 (2019) 27–38

their impacts across various countries can be analyzed as opposed to an Table 1

event (e.g. hurricane) that may have an impact on one region/country. Countries description.
Previous literature has analyzed the impacts these crises have had, Retrieved from World Bank (2013), National Master (2013), IHT (2013);
however they mainly focused on the tourism industry. For example, UNWTO Compendium (2006–2010), UNDP (2018).
some research has been done on the impact of crises on tourism Costa Rica Honduras
movement, tourism competitiveness, and income (Smeral, 2009; Song
Land (sq. km) 51,060 111,890
& Lin, 2010; Enz, Kosova & Lomanno, 2011; Narayan, 2011; Solarin,
Population (2011) 4,726,575 7,757,687
2016; Ritchie, Molinar, & Frechtling, 2010). In the study by Gul, Asik, GDP per Capita in US$ 8647 2247
and Gurbuz (2014), the researchers investigated the effect of global GDP growth % (2011) 4.2 3.6
economic crisis on Turkish tourism demand. Others analyzed the im- Population below Poverty Line 16% (2006) 65% (2010)
pact of terrorist attacks of 9/11 on demand for tourism (Buigut & Corruption (out of 100) a 53 24
Homicide rate (per 100,000 population) 8.5 90.4
Amendah, 2016; Drakos & Kutan, 2003; Staffrod & Armoo, 2002; Taylor
Tourism market share (Central America) 26.6% 10.6%
& Enz, 2002). Number of Arrivals (thousands) 2192 871
However, very limited research has been conducted on the impact Leisure tourists (%) 86% 72.3%
of such crises on the hospitality industry. The few studies that have Tourist receipts per arrival $1042 $638
Tourism contribution to GDP 12.2% 15.3%
been published have mainly examined the perceptions of hotel em-
Human Development Index (HDI) 0.654 0.505
ployees and what steps were taken to minimize the effects (Alonso- Mean years of schooling 8.7 6.2
Almeida & Bremser, 2013; Kimes, 2009; Okumus & Karamustafa, 2005; Life Expectancy at birth 79.6 73.3
Okumus, Altinay, & Arasli, 2005; Pizam, 2009). As of today, only one
a
study known to the authors looks at the impact of both crises si- 100 = no corruption.
multaneously while also addressing the hotel industry. In their study,
Kosová and Enz (2012) utilize the United States as their case study which government assistance should be available to the tourism in-
while exploring the effects on hotel performance. Even though this dustry at times of crisis”. He then further continues that there is a need
study is the first of its nature, the study does not provide adequate to understand “if crisis events are in fact a ‘normal’ part of doing
understanding of the financial crises due to its limited data set as their business” (p. 411) or just a stage during a business cycle.
years of investigations were between 2000 and 2009, lacking to provide
full picture of the impact of global economic crises on the hotel in- 2. Literature review
dustry. In addition, their results are limited to the United States and
very difficult to generalize to other destinations or developing econo- 2.1. The terrorist attacks of 9/11 and the global economic and financial
mies. crisis of 2008
Furthermore, the majority of the studies have been carried out in
developed countries such as Spain, Turkey, or Hong Kong (Gul et al., Various definitions of crisis exist in academic literature. In general,
2014; Okumus et al., 2005; Okumus & Karamustafa, 2005; Perles-Ribes, a crisis can be defined as an event emerging from either the internal or
Ramón-Rodríguez, Rubia-Serrano, & Moreno-Izquirdo, 2016; Song, Lin, external environment of an organization, region, or country and can
Witt, & Zhang, 2011). Others have addressed region, such as Europe, include ecological, financial, regional or global sectors (Okumus et al.,
Asia, or North America (Ritchie et al., 2010; Smeral, 2009; Song & Lin, 2005; Okumus & Karamustafa, 2005). Crisis events have been occurring
2010). As of today, no studies have been conducted on developing for millennia, however, what has recently changed is the mobility and
countries with the exception of Mauritius (Solarin, 2016). However, scale of the tourism industry (Hall, 2010). Therefore, the notion of crisis
Solarin (2016) study on Mauritius concentrated on the tourism industry in tourism is more visible and can be understood as difficulties tourists
rather than hospitality. Therefore, this study investigates the impact of face while traveling (getting to a destination). Recently, the term has
such crises on developing economies. been associated with the terrorist attacks of 9/11 and the financial crisis
The reasoning behind choosing developing countries was the im- of 2008, both having a tremendous impact on the industry (Hall, 2010;
portance of hospitality and tourism industry in these economies. The Kosová & Enz, 2012).
industry has become an important driver of socio-economic progress The magnitude of the terrorist attacks of 9/11 in terms of the
and growth, often accounting for one of the main sources of income in number of fatalities and injuries played a major role in spreading the
these destinations. Therefore, it is imperative to understand the impact insecurity and the fear of recursive attacks in other destinations and
these crises have on the hospitality industry (Chen, 2011) when it disrupting air transportation (Araña & Leon, 2008; Ashworth and
comes to developing economies. Since 1980, the tourism market share Hartmann, 2005; Drakos & Kutan, 2003; Kosová & Enz, 2012; Pizam,
in developing countries increased by 15%, expected to reach 57% by 1999). When tourists assign a big weight to riskiness of a destination, its
the year 2030 (UNWTO, 2015). The main aim of the paper is to ex- surrounding destinations may well be affected adversely due to this
amine the effects of terrorist attacks of 9/11 and global financial crisis substitution effect. For instance, Drakos and Kutan (2003) examined the
of 2008 on performances of hotel firms in the Central America, speci- spillover effects of various terror attacks during the 1990s in three
fically Costa Rica and Honduras. Mediterranean countries – Greece, Turkey and Israel- and concluded
The reason behind focusing on these two economies stems from that tourists substitute one destination for another when terror attacks
these countries being in different levels of the tourism area life cycle are realized in that country. However, as the intensity and the severity
(Kubickova & Li, 2017). Although both countries are in Central America of terror attacks increase, tourists tend to avoid the risky region as a
and considered to be ‘developing countries’, their economic and de- whole and travel to destinations that are far away from that region
velopment conditions are different. The countries differ in terms of (Drakos & Kutan, 2003). Thus, the contagious effects of terror attacks
their tourism contribution to gross domestic products (GDPs), safety, may or may not be limited to the borders of that destination.
corruption levels, supply conditions, and tourist characteristics (as de- The global financial crisis of 2008 was one of the worst financial
picted in Table 1 in later section). Therefore, the motivation behind this crisis since the Great Depression, kicked off by a crisis in the US real
analysis lies in questioning the ‘one size fits all’ approach to overcome estate sector (Hall, 2010; Smeral, 2009). National economies around
(or at least mitigate) the adverse effects of crisis. To the extent of the the world were seriously affected, either reducing their economic
authors' knowledge, this is the first study of such nature. As Hall's growth or reporting a negative one (Papathedorou, Rosselló & Xiao,
(2010) points out, there is a need for further understanding “with re- 2010; Song & Lin, 2010). Since tourism has such importance to gen-
spect to the strategic nature of business planning and the extent to erating income and employment, adverse effects of economic crisis on

28
M. Kubickova et al.
the tourism sector emerged mainly in developing countries (Karakas &
Tatar, 2015). As Karakas and Tatar (2015) pointed out, after the con-
tractionary period up to 2009, the global tourism sector leapt into a
good economic period starting from 2010 and was anticipated to re-
cover after 2011. During the recovery period, occupancy rates and
revenue per available room (RevPar) indicators were observed to in-
crease once again (Karakas & Tatar, 2015).
2.2. The impact of crisis on hotel operations
The effects of a crisis on the industry varies, affecting both supply
and demand. The level of impact will depend on the geographical scope
of the shock (global or regional), the geographic location of the desti-
nation, tourism development, the stage in the tourism life cycle, eco-
nomic and political condition in the country, as well the tourist's
country of origin (Chen, 2009; Gul et al., 2014; Perles-Ribes, Ramón-
Rodríguez, Rubia-Serrano, & Moreno-Izquierdo, 2016). As Gul et al.
(2014) points out “during an economic recession, fluctuating exchange
rates and interest rates, loss of market confidence and withdrawal of
investment funds can all create a tourism crisis” (p. 23).
During crisis, travelers' behavior changes. In general, business tra-
velers are hit much harder than leisure ones and average accom-
modations show higher rates of decline than budget accommodation or
luxury hotels (Papatheodorou & Arvanitis, 2014; Smeral, 2010). Tour-
ists are more likely to take shorter-trips and substitute their interna-
tional travels for domestic ones, leading to an increase in domestic
tourism (Gul et al., 2014; Papatheodorou & Arvanitis, 2014; Pizam,
2009; Rittichainuwat, Chakraborty, & Rattanaphinanchai, 2014;
Smeral, 2009).
Furthermore, tourists become more price sensitive, limiting their
expenditures and switching to cheaper products (Naidoo, Ramseook-
Manhurun, & Seetaram, 2010). Such shifts in consumer behavior may
influence hotel companies to revisit their pricing strategies and force
them to engage in ‘price wars’ (Gul et al., 2014; Perles-Ribes et al.,
2016; Smeral, 2010). Hotels may have to offer lower prices or better
value for their products as tourists become more price sensitive (Shama,
1981). This was confirmed by Naidoo et al. (2010) who found that
hotels in Mauritius offered extra nights free, leisure activities and up-
grades of hotel rooms rather than huge price decreases.
After global crises, such as the economic and financial one, con-
sumers are more likely to invest in their indispensable needs rather than
travel which is perceived as discretionary (Papatheodorou & Arvanitis,
2014; Iordache, 2009). As demand for accommodation decreases, this
results in not only fewer guests in the hotels, but also in a significant
decline in the average expenditure per guest (Gul et al., 2014; Pizam,
2009; Ritchie et al., 2010; Smeral, 2010; Youn & Gu, 2010). This was
confirmed by Chen (2011) who shows that hotel revenue (occupancy
rate and revenue per available room) and profitability (return on
equity) impact significantly the international tourism development.
Therefore, crises do not just have an imminent effect on a destination;
the impact may be also long-lasting.
3. Research methodology
3.1. Research context — the hotel industry in Honduras & Costa Rica
The primary areas of interest in this research are Honduras and
Costa Rica. Both countries are located in the Central American region
(Fig. 1), characterized by poverty, violence, and underdevelopment
(Hammill, 2007).
Therefore, it should not be a surprise that tourism has been utilized
as a primary development strategy for the region, becoming one of the
main generating sectors of currency in the economy (IHT, 2013; RIE,
2010). As UNWTO Secretary-General, Mr. Rifai states “tourism has
proven to be one of the most resilient economic sector worldwide. It is
creating jobs for millions at a time when providing perspectives for a
29
Journal of Hospitality and Tourism Management 38 (2019) 27–38
better future to people of all regions is one of our biggest challenges”
(UNWTO Press Release, 2016). Between 2000 and 2008, Central
America experienced 8.4% growth in international tourist arrivals, the
highest rate among the world (UNWTO, 2010). However, tourism de-
velopment has been uneven, with some countries attracting more
tourists than others (Hammill, 2007).
Even though both countries are located in the same geographic lo-
cation, Honduras is about twice as large as Costa Rica, with a popula-
tion sixty percent larger than Costa Rica. As depicted in Table 1, in
2012, Costa Rica accounted for 26.6% of the total tourism market share
for the Central American region, while Honduras only for 10.6%. In
addition, Honduras' GDP per capital is four times lower than GDP of
Costa Rica, represented by lower GDP growth rate (4.2% compared to
3.6%). Such economic difference is also visible in the percentage of
population living below poverty level (16% in Costa Rica compared to
65% in Honduras). Table 1 provides additional information on both
countries.
In terms of the hotel industry, the size of Costa Rica's hotel rooms
not only exceeds Honduras in number of hotel rooms 4.5 times, but also
in demand (Table 2). This is very important as Costa Rica is a much
smaller destination geographically, yet the numbers indicate that the
tourism industry is highly developed in the destination.
Considering arrivals by nationality, the majority of tourists that
traveled to Honduras in 2010 came from the Central American region
(46%) whereas in Costa Rica, the majority of tourists came from North
America (47.8%) (Table 3). However, when analyzing the number of
arrivals, Costa Rica still receives more tourists than Honduras, espe-
cially when it comes to South America (119 thousand arrivals in 2010
compared to nineteen thousand arrivals for Honduras), North America
(one million arrivals in 2010 compared to 352 thousand arrivals for
Honduras), and Europe (286 thousand arrivals in 2010 compared to
ninety thousand arrivals for Honduras).
3.2. Constructs utilized
3.2.1. Dependent variables
To study the impact of the crises on the performance of hotels in
Costa Rica and Honduras, monthly hotel performance data was col-
lected from the Smith Travel Research (STR) database for the period of
2000–2012. These years were selected as 2000 provides us with data
just before the 9/11 attack, thus, depicting the change in tourism before
and after the attack. The year 2012 was selected as it was the last year
that was available to researchers at the time of data analyses and
provided the researchers with sufficient data to view the impact of the
economic crises during the years. Specifically, hotel occupancy rate
(OccupancyRate), average daily room rate (ADR), and revenue per
available room (RevPar) were employed as dependent variables. ADR
and RevPar are adjusted for inflation according to corresponding year
and country.
OccupancyRate represents a proportion of hotel rooms sold during
specific time periods (in this case, per month). It is calculated by di-
viding the number of rooms sold in a hotel by the number of rooms
available in a hotel.
ADR represents an average price paid for a room sold during specific
time periods (in this case, per month) and is calculated as a proportion
of total revenues earned from the rooms sold to number of rooms sold.
RevPar denotes the maximum revenue that is earned per available
room. RevPar is a composite of the hotels' occupancy with average daily
rate, allowing for easy comparison across competitors within a cus-
tomer defined market (Yang & Cai, 2016). The general consequence
driven from the literature is that RevPar will decrease when ADR and
occupancy rates decrease (Dzhandzhugazova, Zaitseva, Larionova, &
Pervunin, 2015; Karakas & Tatar, 2015).
3.2.2. Independent variables
There are two independent variables in this study: the 9/11 terrorist
M. Kubickova et al. Journal of Hospitality and Tourism Management 38 (2019) 27–38

Fig. 1. Map of Honduras & Costa Rica.

Source: Google Maps.

Table 2
Hotel industry overview.
Note: retrieved from STR & UNWTO Compendium (2000–2012).
Costa Rica Honduras

2000 2012 Δ 2000 2012 Δ

Number of rooms 29,497 45,531 54.3% 13,943 19,679a 41.1%

Hotel Supply 5,146,654 6,589,023 28% 1,169,993 1,432,525 22%
Hotel Demand 3,051,799 3,872,746 26% 615,796 831,428 35%
Hotel Revenue $264,901,529 $524,485,548 97% $57,397,931 $83,564,876 45%
Average length of stay 11.3 11.6 2.6% 10.4 10.5 0.9%
Occupancy Rate 59.3% 58.8% −0.8% 52.6% 58.0% 10%
ADR $86.80 $135.43 56% $93.21 $100.51 7.8%
RevPar $51.47 $79.60 54% $49.06 $58.33 19%

a
As of 2007.

attack (Dummy 9/11) and the global financial crisis (Financial). Effects sufficient part of the recovery of accommodation sector in both of the
of these events are measured on two different levels: contemporaneous countries. On the other hand, the financial crisis was considered to last
effect and persistent effects in longer horizons. for two years in the past studies since the recovery period begins
For the contemporaneous effects of crises, the indicator variable for afterwards for the financial institutions in the market (Jagolinzer,
9/11 and the financial crisis equal to one in September 2001 and Larcker, Ormazabal, & Taylor, 2014).
September 2008, respectively. September 2008 is selected since that is
when the Lehman Brothers declared bankruptcy and September has
3.2.3. Control variables
been utilized in a previous study conducted by Kosová and Enz (2012).
This study also controlled the following three levels of variables in
The persistent effects of crises after their first impacts are measured
our econometric models. The first level, destination related variables
with a similar process used by Kosová and Enz (2012). These effects are
(supply-side), includes accommodation establishment, hotel supply,
accounted for by different dummy variables for the subsequent months
corruption, safety, and tourism specialization in the destination
of the crises. Specifically, a dummy variable for the next month after
(Table 4). Previous studies found that an increased tourism supply
the financial crisis, is equal to 1 if it is October 2008 but 0 otherwise
contributed to the decreasing ADR (Dzhandzhugazova et al., 2015;
and the rest of these dummy variables are constructed in the same way.
Karakas & Tatar, 2015). In addition, the presence of corruption tarn-
Twenty-four additional dummy variables are employed for 9/11 and
ishes the destination's image and weakens the country's business en-
the global financial crises respectively, however only six of them for
vironment, which is needed for the destination's success. Countries
each crisis are reported to save space and present those with meaningful
experiencing lower levels of corruption are typically economically
impact. The general implementation for 9/11 in the literature is to
stable and have government policies in place to support tourism de-
integrate only four dummies (Wooldridge, 2015; Belasen & Polache,
velopment (Das & DiRienzo, 2010; Enright & Newton, 2004). Destina-
2009; Strobl, 2011; Kosová & Enz, 2012), however, the authors want to
tion safety is also taken into consideration as previous studies have
ensure that the future effects are extinguished after four months.
shown that perceived safety and security of a destination influences a
Moreover, the authors have performed the same analysis with longer
traveler's decision of site selection (Pizam, 1999; Sirakaya, Sheppard, &
horizons yet recognized that the six-month time period covers the
McLellan, 1997). The second level, traveler related variables (demand-

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M. Kubickova et al. Journal of Hospitality and Tourism Management 38 (2019) 27–38

Table 3
Selected arrivals by country of origin.
Note: retrieved from UNWTO Compendium (2000–2010).
Costa Rica (mrkt. share % &
number of arrivals)
2000 2010
6 24
OccupancyRatet = β0 + β1 ∑ Dummy9/11 t + j + β2 ∑ Financialt+j
j=0 j=0
+ β3 Establishmentt + β4 Hotel Supplyt + β5 Corruptiont
Honduras (mrkt. share % &
number of arrivals) + β6 Safetyt + β7 TouProt + β8 LeiTravelt
2000 2010 + β9 BusTravelt + β10 StayLengtht + β11 Year

Central 26.33a 30.6a 49.57a 46.36a

+ β12 Month + εt (1)
America (286,466)b (642,517)b (233,319)b (415,246)b 6
Nicaragua 13.16 20.35 13.67 12.53
El Salvador 2.86 2.86 16.86 17.04
ADRt = β0 + α1 OccupancyRatet − 1 + β1 ∑ Dummy9/11 t + j
j=0
Guatemala 3.05 3.05 14.22 13.06
24
North 47.41a 47.88a 36.15a 39.36a
America (515,853)b (1,005,309)b (170,165)b (352,540)b + β2 ∑ Financialt+j + β3 Establishmentt + β4 Hotel Supplyt
USA 39.49 39.57 31.98 34.2 j=0
Canada 4.57 5.7 1.86 2.32
+ β5 Corruptiont + β6 Safetyt + β7 TouProt + β8 LeiTravelt
Europe 14.39a 13.66a 9.14a (43,022)b 10.11a
(156,562)b (286,923)b (90,552)b + β9 BusTravelt + β10 StayLengtht + β11 Year Dummies
United 1.68 1.65 1.14 1.27
Kingdom + β12 Month Dummies + εt (2)
Spain 2.47 2.31 1.48 1.64
6 24
Germany 2.43 2.12 1.33 1.33
Italy 1.54 0.94 1.54 2.21 RevPart = β0 + β1 ∑ Dummy 9/11 t + j + β2 ∑ Financialt+j
South 8.79a(95,612)b 5.68a 2.62a(12,342)b 2.19a j=0 j=0
America (119,167)b (19,589)b
+ β3 Establishmentt + β4 Hotel Supplyt + β5 Corruptiont
a
Market share %. + β6 Safetyt + β7 TouProt + β8 LeiTravelt + β9 BusTravelt
b
Number of arrivals.
+ β10 StayLengtht + β11 Year + β12 Month + εt (3)
side), includes purpose of travel and length of stay. The third level, time where εt is the error term.
related variables, includes both year dummies and month dummies. Ordinary least squares regression method with time dummies is
Year dummies are employed to control the year-specific exogenous employed to estimate the regression model for Costa Rica and Honduras
shocks, while month dummies are included to control the seasonality separately. Please note that because ADR (price) at time t can be af-
effects. fected from the demand conditions (occupancy rate) at time t-1, one
period-lagged occupancy rate is also used in the ADR equation to ac-
count for the demand conditions in the past, which is in line with
3.3. Econometric model Kosová and Enz (2012) study.

This study utilizes monthly data collected over period of thirteen
years (2000–2012) (a total of 4745 observations. The years utilized
were selected based on data availability at the time of analyses. The
sample includes all hotels that report their daily statistics to STR, re-
sulting in a total of 364 hotel properties, varying in size and the level of
service provided. The main aim of this paper is to analyze the effects of
9/11 and the global financial crisis on occupancy rate, average daily
rate (ADR), and RevPar of hotels in Costa Rica and Honduras. The
analysis of this study also tends to investigate the differences between
two countries' responses to these crises in terms of magnitude and
timing of the effects. Thus, corresponding model specifications for each
country can be presented as follows:
4. Empirical results
4.1. Descriptive analysis
Before examining the impact of external shocks on hotel perfor-
mance, an overall picture of the hotel segment is analyzed. First, a
comparison has been made in terms of room demand for both desti-
nations. STR Global (2017) defines demand as number of rooms sold in
a specific time period. According to Fig. 2, Costa Rica's demand no-
ticeably declined after both crises while in Honduras the impact was
less visible, especially after September 11.
Fig. 3 depicts room revenues (the total room revenue generated
from the guestroom rentals/sale) for each country.

Table 4
Control variable description.
Variable Description Data Source

(1) Destination
Establishment The number of hotels in a country at time t (natural logarithm) STR
Hotel Supply The number of available room-nights in a country at time t, measured by multiplying the total number of hotel STR
rooms available and the number of days in a given time period in which the hotel is operating (natural logarithm)
Corruption Corruption perceptions index in a country at time t, ranging from 100 (very clean) to 0 (highly corrupt). Transparency International
Safety Homicide rate in a country at time t United Nations Office on Drugs and Crime
(UNODC)
TouPro The contribution of international tourism receipts to gross domestic product (GDP) in percentage terms. World Bank and Knoema
(2) Traveler
Lei Travel The percentage of leisure travelers to a country at time t UNWTO Compendium
Bus Travel The percentage of business travelers to a country at time t UNWTO Compendium
Stay Length The average number of days that guests stay at a country at time t UNWTO Compendium
(4) Time
Year A series of year dummies with 2000 as the reference year –
Month A series of year dummies with January as the reference month –

31
M. Kubickova et al.
Fig. 2. Room demand (Costa Rica & Honduras). Note: data obtained from STR Global.
It is evident that Costa Rica endured larger loss right after the
September 11 terrorist attack as well the economic crisis when com-
pared to Honduras. Even though Honduras did not display any evident
losses after September 11, slight decline in hotel demand can be visible
between 2008 and 2009, reflecting their source market origins of
tourists.
Furthermore, monthly data for RevPar was analyzed and depicted in
Figs. 4 and 5. Fig. 4 represents the September 11 crisis, exhibiting the
monthly time period between October 2000 and April 2003. Fig. 5
depicts the Economic Crisis of 2008, specifically, the time period be-
tween October 2007 and April 2010. Looking at the monthly RevPar
rates over a period of two to three years allows us to understand the
lodging industry seasonality patterns and the possible impact the events
had on the destinations.
Based on Fig. 4, it can be observed that this crisis had a much lower
impact on the hotel industry in Honduras than Costa Rica. The RevPar
for both destinations follows very different seasonal patterns, with
Costa Rica displaying seasonality patterns (with high seasons in the
winter months) while Honduras has very slight changes between var-
ious seasons. In addition, it is obvious that the terrorist attack had an
impact on Costa Rica as Costa Rica was not able to recover from the
September 11 terrorist attack in winter of 2001/2002 with only slight
improvements the following winter 2002/2003. On the other hand,
Honduras RevPar indicates very small changes with slight dip in the
winter of 2001/2002 while recovering very quickly and actually in-
creasing their RevPar the following summer of 2002.
When it comes to the Economic Crisis of 2008 (Fig. 5), it can be
observed that RevPar for Costa Rica shows a very clear pattern with
sharp declines during the fall season. Moreover, even though Costa Rica
Fig. 3. Room revenues (Costa Rica & Honduras). Note: data obtained from STR Global.
32
Journal of Hospitality and Tourism Management 38 (2019) 27–38
experienced slight increase between October and December 2008, their
RevPar was on decline from January 2009 through October 2009.
In the case of Honduras, we can observe slight decline during Fall
2008 and the first half on 2009. However, their RevPar started to re-
cover much sooner than the one of Costa Rica, specifically as early as
July 2009. This may have been due to the fact that Honduras' ADR
remained almost unchanged while Costa Rica's ADR suffered large
fluctuations.
4.2. Regression results
In terms of stationarity, ADR, occupancy rate and RevPar series in
Costa Rica and Honduras do not have unit root at 5% significance level,
which are tested by the Phillips Peron test. However, with regards to
the regressors, all of them are non-stationary except length of stay for
both Costa Rica and Honduras. It is imperative to investigate the sta-
tionarity of time-series data, as incorrect choice of data transformation
could provide biased results, thus leading to incorrect interpretations
and misleading conclusions (Chiou-Wei, Chen, & Zhu, 2008). Moreover,
purpose of travel (leisure) variable for Costa Rica and hotel supply (log)
variable for Honduras are stationary. The MacKinnon approximate p-
value for Phillips-Peron test, where values greater than 0.1 indicate the
non-stationary variables, are presented in Table 5. Note that all of the
dummy variables are stationary therefore, the table does not display
those results.
Since the dependent and independent variables are not in the same
order of integration, an ARDL approach (autoregressive distributed lag)
by Pesaran, Shin, and Smith (2001) is followed. The optimum max-
imum lag for the non-stationary variables in ARDL model is determined
M. Kubickova et al. Journal of Hospitality and Tourism Management 38 (2019) 27–38

Fig. 4. RevPar October 2000 – April 2003. Note: data obtained from STR Global.

by the Schwarz-Bayesian Information Criterion. For both countries, Table 5

regardless of the dependent variable, the optimum maximum lag is one. Phillips-Peron test.
The F-statistics and t-statistics from the ARDL bounds test show that Costa Rica Honduras
both the terrorist attacks of 9/11 and the global financial crisis of 2008
negatively affected the occupancy rate, ADR and RevPar in Costa Rica Occupancy Rate 0.0000 0.0000
both in the short-run and long-run. However, the effect of global fi- ADR 0.0067 0.0024
RevPar 0.0006 0.0000
nancial crisis of 2008 on each of the dependent variables is positive in Hotel Supply (log) 0.1648 0.0000
the short-run and also in the long-run. Establishment (log) 0.8790 0.1104
Table 6 shows the results estimating the impact of both crises on Corruption 0.2556 0.2192
lodging performance, specifically, the occupancy rate, ADR, and Re- Safety 0.6153 0.9660
Tourism Contribution to GDP 0.8597 0.5193
vPar. In addition, various control variables were taken into considera-
Purpose of travel (Leisure) 0.0553 0.3251
tion, such as the destination characteristics, traveler characteristics, and Purpose of travel (Business) 0.3046 0.6865
time dummies. Length of Stay 0.0338 0.0620

Note: The values in cells represent MacKinnon approximate p-value for Z(t),
4.3. Terrorist attack of 9/11 results where values greater than 0.1 indicate the non-stationary variables.

The results indicate that the terrorist attack of 9/11 had a significant
negative impact on Costa Rica when compared to Honduras.
Specifically, when it comes to occupancy rate, Costa Rica experienced
an immediate drop after September 11. The attack contributed to a 7.34
percent decline in occupancy rate. The negative impact of the event
gradually increased over time, peaking in month three with slightly
lower effects in months four through six. On the other hand, Honduras
was less impacted by the terrorist attack. Even though Honduras ex-
perienced decline in terms of occupancy rate in the first month (decline
by 9.98 percent), it reported a positive increase in occupancy rate in
month four (4.19 percent). Such results are surprising to find as one
would expect both countries to be equally influenced by such events.
The difference in results may be due to the type of tourists that visit
both destinations. Similar results were found in the study by Drakos and
Kutan (2003) where differences were found between Israel, Turkey, and
Greece. Costa Rica is one of the best examples of a country that has
turned out to be a popular tourist destination with tourism becoming
one of the most important sectors in the country (Rivera, 2004). Since
the terrorist attack occurred in the United States and the majority of the
tourists coming to Costa Rica are from North America (47.41%), Costa

Fig. 5. RevPar October 2007 – April 2010. Note: data obtained from STR Global.

33
M. Kubickova et al. Journal of Hospitality and Tourism Management 38 (2019) 27–38

Table 6
Effects of crisis on hotel industry in Costa Rica and Honduras.
Immediate impacts Dependent Variables

Occupancy Rate ADR RevPar

Costa Rica Honduras Costa Rica Honduras Costa Rica Honduras

Terrorist attacks of 9/11

Terrorist attacks (9/11) −7.346*** −3.933 −4.354* 1.008 −11.22*** −1.215
(1.380) (3.324) (2.538) (2.737) (2.503) (1.886)
9/11–1 month later −2.447* −9.983*** −5.242** 0.0635 −7.725*** −5.799***
(1.374) (3.404) (2.480) (2.702) (2.385) (1.966)
9/11–2 months later −8.014*** −3.921 −9.344*** −10.12*** −11.94*** −5.943***
(1.381) (3.253) (2.335) (3.149) (2.440) (1.775)
9/11–3 months later −10.43*** 0.135 −12.65*** 1.089 −16.69*** 0.125
(1.542) (3.106) (2.987) (3.101) (2.746) (2.326)
9/11–4 months later −7.043*** 4.195* 2.102 −6.285*** −4.932*** −1.707
(1.213) (2.251) (2.076) (2.277) (1.449) (1.815)
9/11–5 months later −4.139*** 2.687 2.380 −6.672* −0.624 −1.833
(1.112) (1.936) (1.920) (3.381) (1.832) (2.263)
9/11–6 months later −4.207*** −2.518 −2.045 −9.268*** −4.481*** −6.976**
(1.545) (2.608) (1.316) (3.126) (1.327) (3.041)
Global Financial & Economic crisis of 2008
Economic crisis of 2008 −4.494*** 3.987 −6.149*** 2.023 −6.457*** 4.006*
(1.440) (2.588) (1.843) (1.556) (1.173) (2.048)
Crisis of 2008–1 month later −4.535*** 3.341 −5.683*** 4.407** −6.119*** 4.292**
(1.429) (2.604) (1.470) (1.721) (0.884) (2.105)
Crisis of 2008–2 months later −6.021*** 2.962 −3.767*** 2.868 −6.027*** 3.042
(1.455) (2.477) (1.849) (1.866) (1.003) (1.922)
Crisis of 2008–3 months later −11.10*** −1.724 4.602* 1.735 −4.601** −0.237
(1.854) (2.299) (2.532) (2.075) (2.198) (2.226)
Crisis of 2008–4 months later −8.144*** 29.15*** 1.806 14.36** −3.880** 15.72***
(1.281) (2.166) (1.976) (7.135) (1.626) (1.615)
Crisis of 2008–5 months later −10.18*** 22.78*** −2.862* 13.87*** −8.815*** 11.54***
(1.130) (1.852) (1.461) (5.147) (2.030) (2.093)
Crisis of 2008–6 months later −10.69*** 28.25*** −0.0687 14.09** −7.312*** 15.05***
(1.540) (2.507) (1.327) (6.309) (1.502) (2.876)
Destination characteristics
Establishments (log) 711.5*** −172.8 −537.9** 211.0 −242.7 71.70
(205.8) (229.8) (265.8) (179.4) (248.7) (173.1)
Hotel Supply (log) −494.5*** 117.3 68.45 −427.8* −207.8 −246.1
(126.0) (231.5) (163.7) (221.9) (156.2) (213.8)
Corruption −0.120 0.526* 0.489 0.795*** −0.256 0.715***
(0.348) (0.297) (0.446) (0.240) (0.395) (0.255)
Safety −1.345** −0.216*** 1.700** −0.120** 0.189 −0.149***
(0.584) (0.057) (0.701) (0.0556) (0.512) (0.0414)
Tourism contribution to GDP 1.000 1.391 2.455 −5.453*** 0.414 −2.040*
(1.261) (1.223) (1.637) (1.169) (1.489) (1.039)
Traveler characteristics
Purpose of travel (leisure) −1.026*** 0.117 0.378 −0.0914 −0.614* −0.0364
(0.311) (0.189) (0.376) (0.148) (0.331) (0.149)
Purpose of travel (business) −2.320*** 0.462** 1.494 0.453** −1.203 0.378**
(0.741) (0.213) (0.921) (0.194) (0.866) (0.168)
Length of stay −2.360*** −0.115 5.880*** −0.0857 2.085** −0.0922
(0.889) (0.650) (1.025) (0.482) (0.911) (0.532)
Time Dummies
Year dummies Yes Yes Yes Yes Yes Yes
Month dummies Yes Yes Yes Yes Yes Yes
Constant 1269** −292.0 818.6 1945** 1.876** 1170
Observations 156 156 155 154 156 155
Adjusted R2 0.948 0.807 0.953 0.888 0.948 0.771

Note: robust standard errors are displayed in parentheses.

The results including full set of control variables are available upon request.
*p < 0.1, **p < 0.05, ***p < 0.001.

Rica would have been more impacted than Honduras. In addition,
tourists from United States usually fly to Costa Rica and due to the type
of the attack, this may have posed insecurity on a traveler. Previous
research shows that during crisis, international travel is substituted for
domestic tourism (Pizam, 2009; Smeral, 2009). As reported by ABC
News, immediately after the 9/11 attack, Americans were afraid to fly
and it took a courage to get on a plane (Seaney, 2011). This can be also
a possible explanation why Honduras did not see such a negative im-
pact. As reported earlier, tourists that visited Honduras mainly arrived
from other Central American countries (49.57%) as opposed to tourists
from United States (36.15%), giving them an opportunity to travel by
car rather than fly due to its proximity. In this case, it can be said that
‘domestic tourism’ (describing tourists within the Central American
region) took over, diminishing the reason for not traveling due to the
fear of flying.
Another possible explanation may have to do with the type of hotels
located in each country. As stated in previous research, high-priced
hotels experience a greater decline in business than budget ones

34
M. Kubickova et al.
(Okumus & Karamustafa, 2005; Taylor & Enz, 2002). Even though five
star hotels in Costa Rica account for only for 2% of all hotels (Rivera,
2004), as of today, Honduras does not have a hotel that could be truly
classified as a five star hotel and the number of four star hotels is rather
limited. This may be another justification of why we see such a decline
in occupancy rate in Costa Rica as opposed to Honduras.
When it comes to ADR, differences can be observed among the two
countries. Costa Rica's ADR dropped by 4.35 percent and was heavily
affected in the first three months, ranging from 5.24 percent to 12.65
percent. However, opposed to occupancy rate, this lasted only the first
three months. This may be an indication of good revenue management
tactics. Due to the fact that tourism has a long history in Costa Rica and
is more advanced than in Honduras, pricing strategies are well devel-
oped and commonly used, allowing hotels to adjust accordingly. This
has been shown in previous studies where crises influence hotels to
revisit their pricing strategies (Gul et al., 2014; Smeral, 2010). On the
other hand, the attack had a much larger negative impact on ADR in
Honduras with a decrease in month two by 10.12 percent and then
subsequently in months four through six. As opposed to Costa Rica,
strategic revenue management is mostly common among the well-
known brands, such as Holiday Inn or InterContinental, which account
for a total of twelve properties as of 2017. With this in mind, hotels in
Honduras may have harder time to adjust to such a shock in their
pricing strategy.
Since RevPar is calculated by combining ADR and occupancy rate,
similar results were observed in terms of RevPar, with a decline of
11.22 percent right after the attack, with large drops in the first three
months, ranging from 7.72% to 16.69%. Such decline was not im-
minent, but was evident over the period of six months. On the other
hand, the terrorist attack impacted Honduras only in the first two
months, decreasing by 5.79 percent the first month and 5.94 percent in
month two. This is due to the fact that RevPar is influenced by ADR and
occupancy rate and as discussed previously, Honduras was not im-
pacted as much in terms of arrivals as Costa Rica was.
4.4. Financial crisis of 2008 results
When it comes to the financial crisis of 2008, once again, Costa Rica
was shaped by this event in a more negative way than Honduras, fol-
lowing a similar path to the 9/11 terrorist attack. In terms of hotel
occupancy, the financial crisis in Costa Rica contributed to a decrease of
4.49 percent, ranging from 4.53 percent to 11.1 percent in month three.
In terms of ADR, once again, the event had a negative impact, reporting
a decline in months one, two and five. Similar to occupancy rate, the
attack contributed to 6.45 percent decrease of RevPar in Costa Rica,
reporting negative and significant numbers for each of the consecutive
six months.
A possible explanation, once again, may have to do with market
differences in terms of the type of tourists they attract and their
spending behaviors. Even though the financial crisis was different from
the 9/11 attack, the spending per arrival sharply decreases in Costa
Rica as opposed to Honduras. In Costa Rica, the international tourism
expenditure decreased from US$ 751 million in 2007 to US$ 462 mil-
lion in 2009. As mentioned previously, the majority of tourists visiting
Costa Rica come from the North American region as opposed to the
Central American region when it comes to Honduras. Travelers from the
United States and Canada tend to spend more in terms of international
tourism as opposed to other countries within the Central American
region. For example, in 2012, United States and Canada placed among
the top six spenders in international tourism (UNWTO Tourism
Highlights, 2012).
In terms of Honduras, the results suggest a different story. Honduras
actually saw an increase in international tourism expenditure, in-
creasing from US$ 309 million in 2007 to US$ 361 million in 2009. The
results indicate positive increase in terms of occupancy rate, ADR, and
RevPar as well. Even though the overall occupancy rate was positive
35
Journal of Hospitality and Tourism Management 38 (2019) 27–38
but not significant, months four through six display a positive impact of
up to 28.25 percent in month six. Similar results could be observed in
the case of ADR with positive and significant data reported for months
one and four through six, presenting an increase of up to 14.36 percent.
This is also reflected in RevPar, which was positive and significant,
reporting 4.0 percent increase. Once again, a possible explanation may
have to do with the type of tourists that travel to Honduras, thus being
less affected by the global financial crises. As mentioned previously,
majority of tourists that visit Honduras come from the Central
American region (46%), traveling mainly by car. This is different from
Costa Rica where Costa Rica mainly depended on visitors from the
United States arriving by plane. Since car transportation is often more
reasonable than flying, decision to travel can be left to last minute, and
visitors are familiar with the situation in the nearby countries (such as
Honduras), it can be assumed that tourists from the region are more
likely to visit Honduras. Another possible explanation is due to the
2005 agreement between Honduras, Guatemala, El Salvador, and
Nicaragua to create a single Central American visa, allowing for free
border crossing by eliminating visas and improvements to infra-
structure and services (UNWTO, 2013).
4.5. Destination and traveler characteristics results
When it comes to destination and traveler characteristics, supply
conditions (represented by the total of establishments in accommoda-
tion sector in a specific period of time), ceteris paribus, present a ne-
gative impact only when it comes to Costa Rica and its ADR. Such re-
sults are expected as with an increase of competition, price wars will
exist in the market place.
In regard to corruption, it did not have any impact on ADR, RevPar
or occupancy rate in Costa Rica. Such results are not surprising as the
corruption rate in Costa Rica is very low. Contrary to Costa Rica, cor-
ruption in Honduras demonstrated a positive and significant effect on
ADR, RevPar, and occupancy rate. Such results are consistent with
previous studies which have confirmed that countries with higher levels
of corruption actually see an increase in international tourist arrivals
(Kubickova & Li, 2017; Saha & Yap, 2014; Swaleheen, 2011). A possible
explanation as to why corruption was found to have an impact on hotel
performance is due to the institutional weakness. Often, governments in
developing economies ineffectively deal with inefficiencies and failures,
making it difficult for businesses to navigate through the bureaucratic
process. This forces numerous businesses to turn to corruption to ‘get
things done’. As Aidt (2009) states: “national corruption facilitates
beneficial trades that would otherwise not have taken place. In doing
so, it promotes efficiency by allowing individuals in the private sector
to correct or circumvent pre-existing government failures of various
sorts” (p. 272). Therefore, businesses turn to bribes to speed up the
bureaucratic procedures. Furthermore, some officials refuse to provide
service unless a bribe is paid (Aidt, 2009; Melgar, Rossi, & Smith,
2010). This may be a possible explanation as to why corruption was
found to be positive and significant in case of Honduras.
In terms of safety, it can be observed that it had a negative impact
on hotel performance in Honduras when it comes to ADR, occupancy
rate, and RevPar, while in Costa Rica it only influenced occupancy rate.
Once again, such results are not surprising as safety is a major decision
maker for travelers when choosing a holiday destination. Previous re-
search has shown that perceived safety and security of a destination
have an influence on traveler's decision of site selection (Pizam, 1999;
Sirakaya et al., 1997).
When it comes to purpose of travel (if traveling for business or
leisure), Costa Rica showed a negative relationship in terms of leisure
travel when it comes to occupancy rate and RevPar. Such a result is
expected as a majority of tourists visiting Costa Rica came from the
United States who had been heavily influenced by both events.
However, what is worth mentioning is the positive effect of business
travelers on Honduras.
M. Kubickova et al.
Lastly, the length of stay reported a negative and significant impact
on Costa Rica while it did not have any impact on Honduras. Once
again, a possible explanation is the type of tourists that favor Costa
Rica. Tourists visiting Costa Rica predominantly stay for an extensive
period of time and primarily come from North America (US and
Canada). Since Costa Rica saw a major decline of tourists during both
events from these regions, this may have negatively influenced the
length of stay. For example, in 2007, the average length of stay in Costa
Rica was 12.8 days while in 2010 it was only 9.9 days.
5. Conclusions and discussions
This study provided an in-depth view of the impact of two major
international crises (September 11th and the financial crises of 2008)
on two destinations and their hotel performances. The effects of both
events affected hotel performance in distinctively different ways. Thus,
the answer to the question ‘does one size fits all’ is ‘no’ as it can be
argued that two destinations will react differently to the same event.
Not only do variations exist among destinations, but also among events.
Given the nature of the attacks, one would have anticipated a more
negative impact on the hotel industry performance in both destinations.
This confirms previous literature which pointed out that differences
among countries in terms of how they respond to crisis and the impact
crises have on tourism industry exist (Kosová & Enz, 2012; Naudé,
2009). As Naudé (2009) affirmed, there are some destinations that may
be either less affected, avoid recession, or recover sooner than expected.
When it comes to Costa Rica's hotel occupancy, both events (9/11
terrorist attack & 2008 financial crisis) resulted in a sizable and im-
mediate negative impact on hotel performance, declining the occu-
pancy rate up to 11.10 percent. It is worth noting that the global fi-
nancial crisis of 2008 had a larger negative impact on Costa Rica than
9/11 had. This confirms Drakos and Kutan's (2003) argument, who
pointed out that events (crises) with different intensity levels will have
different impacts on the investigated destination. In contrast, in Hon-
duras both events had a very mild impact on the destination.
After further examination of the outcomes, there are numerous
possible explanations as to why differences exists. Possible explanations
include the tourists' origin (their home country) and the mode of
transportation (car versus plane). The results indicate that Costa Rica
was more impacted by the crises than Honduras due to the type of
tourists that visit the destination and how they arrive at the destination.
Safety also played a major role, having a negative impact on both
destinations' occupancy levels. Such a result is not surprising as safety
has a major impact on travelers' choice. In addition, the destination's
level of tourism development, as well as the overall institutional
(government) environment of a destination may have some influence
on how a destination responds to crises. Since Honduras has such high
levels of corruptions, corruption is actually needed to ‘get things done’.
In our study, we were able to observe that destinations which are less
competitive and find themselves at the lower end of the tourism life
cycle (such as Honduras) may be impacted less by major crises than
those destinations on the higher end of tourism life cycle (Costa Rica).
Furthermore, effective institutional responses from the industry will
determine how quickly it can adapt to the turbulent environment
without substantial damage (Kosová & Enz, 2012).
In this sense, the role of government in response to crises cannot be
overlooked. As Nunkoo (2015) points out, government plays a main
role in tourism development. In-depth understanding of the industry is
key in successful crisis management, especially for governments in
developing economies. For example, as it was in the case of Honduras,
the establishment of a single Central American visa between some of
the Central American countries after the 9/11 terrorist attack may have
lessened the impact Honduras felt after the financial crises of 2008.
Therefore, it is very important for the hoteliers and government officials
in each destination not only understand tourists, but also to collaborate
and cooperate in time of crises. This follows Hall's (2010) point of view
36
Journal of Hospitality and Tourism Management 38 (2019) 27–38
about the role of government during the time of crises and the need for
the support of tourism industry.
6. Theoretical and practical implications
This study provides a number of theoretical and practical implica-
tions to hospitality literature through understanding the impact crises
have on hotel performance in Costa Rica and Honduras. In terms of
theoretical implications, this study broadens our understanding on the
impact of crises on hotel industry and the response to such crises in
terms of recovery. Especially when it comes to developing economies,
the literature on this topic is rather scarce. Furthermore, the efforts to
isolate the crises' impacts had on the hotel industry from other desti-
nation-related factors (e.g. corruption) and traveler indicators (e.g.
length of stay) provide a significant contribution to the academic lit-
erature.
When it comes to practical implications, the results suggest that no
two crises are the same in the way they impact the hotel industry in a
destination. In other words, ‘one size does not fit all’. As discussed
previously, for example, high levels of corruption actually helped
Honduras to lower the impact of crises on their destination, where se-
curity actually hindered the tourism development in both locations.
It is important that hotel executive teams have a plan to respond to
crises in a timely manner. A contingency plan with various scenarios
should be prepared in advance to ensure a timely response and to
minimize the impact a crisis can have on the operation. Since tourism is
influenced by discretionary income, tourists may focus on taking either
domestic trips or focus on nearby countries within a driving distance as
it was in the case of Honduras. Thus, it is imperative to have a proper
understanding not only of the competition, but also the macro-en-
vironment hoteliers operate in (e.g. what is the perception of my des-
tination, who are my customers, where do they come from, how do they
arrive to the destination).
In addition, having superior knowledge of revenue management
will minimize the impact crises have on day-to-day operations and how
quickly a hotel can recover from such event. This is not something new
to effective hotel management, however, there is still plenty of hoteliers
(especially in developing economies) that fail when crises occur. Since
tourists become price sensitive during and immediately after crises
occurs (Naidoo et al., 2010), and as this study demonstrated in the case
of Costa Rica, length of stay and the type of tourists can have an in-
fluence on hotel performance, having an effective revenue management
in is a key to successful hotel operation. Therefore, the results of this
study call for the urgency of not only understanding who your custo-
mers are, but also having a blueprint ready in order to adapt crisis
management practices and minimize failures.
From the macroeconomic point of view, governments must under-
stand not only the role tourism plays, but also the role of the hotel
industry in their destination. Especially in developing economies,
governments rely heavily on the hospitality industry for economic
growth and development, but often the industry lacks the proper sup-
port. As Glaser and Shleifer (2002) pointed out, government involve-
ment is necessary for destination development and is a requirement for
most modern economic activities. Therefore, governments (on national
and regional levels) must not only support the hotel industry in terms of
training (e.g. revenue management) and/or legislation, but also provide
adequate marketing campaigns to minimize a crisis's impact on the
industry. Furthermore, ensuring that a country is perceived as a safe
place to visit is a key. As it was demonstrated in the case of Honduras,
safety perception actually hinder tourism development.
This study is a first of many that need to be conducted in order to
better understand the impact crises have on the hotel operation in any
destination. Future studies should concentrate not only on other regions
around the world, but also include additional constructs, such as quality
of life in the destination, the rule of law, the size of government, or
regulatory efficiency and their role in crises management. In addition,
M. Kubickova et al.
as with any other studies, this study is not without limitations. The
findings of this study are specific to those two destinations. Also the
researchers faced limitations due to internal and external validity of the
sample as secondary data were employed. Using secondary data poses a
limitation on the ability of a researcher to verify the data's accuracy.
Therefore, full trust is given to these reputable institutions collecting
data employed in the study. Another limitation has to do with the time
span utilized due to data availability. Thus, future studies should in-
clude longer time spans with multiple different sources of crises.
Acknowledgments
The authors would like to thank the Smith Travel Research (STR) for
providing an access to their hotel performance database.
Appendix A. Supplementary data
Supplementary data to this article can be found online at https://
doi.org/10.1016/j.jhtm.2018.10.002.
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