Introduction To Financial Crisis And Recession Concept

Published Date: 02 Nov 2017

It’s been several years now since the global financial crisis began. Nobody predicted that it would last for such a long time. This is one of the reasons for being so damaging to all of the industries. Among the worst hit industries, the hospitality industry holds a top position. People are spending less money on traveling in order to cover the essential expenses of life.

There are many reasons for choosing this topic. One of the reasons is to try and find if there is any way to predict and prepare the hoteliers for such an important event. There is no doubt that this is very probable to happen again. A lot of economists warned everyone about it, but only a few considered the warnings. Now there is a lot of literature showing that this was predictable, but, in the race for money and profit, people closed their eyes at it.

This research will try to provide an overview on the global financial crisis, and how it affected this, rather sensitive industry. It will also try to find and analyze how the hoteliers and the leaders in this industry perceived it and reacted to it. It will be possible to find if there are any gaps or misperceptions on this factor, and if there is possible to fill them up. Some of the hoteliers adapted to this new economy, but most of them were taken by surprise, and the result was obvious. Many of the "big players" in the industry went down, and new comers appeared with new solutions to attract customers and offer more for less. But there might be a good outcome out of this whole situation. The customers/tourists might find this period appropriate for traveling, since the hoteliers are desperately trying to attract them through convenient packages which are usually set at a very low price, compared to the years before the crisis. Also, investors with money, especially from countries less or non-affected by the recession, will find this period extremely beneficial for large investments and new businesses since the real estate is also seriously affected and the prices are still going down.

The big question is: can the hoteliers offer more with fewer funds? The managers that will be able to answer "yes" to this question will be the ones with many job offers. But it’s not easy at all. Even though the prices went down and everyone knows we are still in full recession, people will still expect to receive what they used to before the crisis. The want to get more value for the same amount of money and in order to achieve this, hoteliers must cut funds from different areas of the hotel.

What this research will try to find is how the managers cut funds in order to stay in business, but without affecting the performance of the establishment.

Paradoxically, in Romania, in 2009 and 2010 the travel agencies were selling the travel packages more expensive, even though the country was in full recession. This is because the foreign hoteliers offered them two choices: either they will bring much more customers, either they will raise the accommodation rates and make the transportation cheaper.

1.1 BACKGROUND TO THE RESEARCH

This research will have a literature base, but a primary research is imperative in order to find how the managers responded to the economic crisis and how the adapted to it. The researcher will use the interview as a research tool in order to get first hand info from the hoteliers. Doing an interview, the researcher can ask in-depth questions and also study the reactions of the respondents.

Also, the researcher will create a questionnaire designed for tourists in order to find out how they perceive the crisis. Do they see it as an opportunity to get the best deals for the least amount of money or did they decide to travel less in order to save money for essential expenses? Based on these research methods, the researcher will be able to collect sufficient data in order to draw a conclusion and to make future recommendations for hoteliers in order to stay in business and adapt to this new type of economy.

The researcher also analyzed many articles in specialty literature books in order to see how the specialists perceived this event and what their recommendations are. In order to provide a strong literature base, there will be many sources cited in this research in order to prove that there are countless explanations and possibilities that could have occurred.

This research will also try to prove that factors such as proper legislation, qualified human workforce, lack of corruption, technical progress, and increased size of the market, better marketing tools and community education are beneficial for a country’s economic status.

1.2 STRUCTURE OF THE DISSERTATION

The following chapters will analyze this problem and will try to find the cause and the solution for this financial event.

The literature review will show and create the literature base for this dissertation in order to find up-to-date information about the effects of the global financial crisis on the hospitality industry, especially in Romania. In this chapter, the researcher will try to summarize the most important and relevant information and draw conclusions out of it in order to be able to make future recommendations.

The methodology chapter will explain the methods used in order to collect important data from the hoteliers in Romania. The researcher will collect primary and secondary data. The primary data is information collected by the researcher himself through structured interviews. Secondary data is the information achieved from specialty literature and research done by other people. This is very important since different researchers will obtain different data and reactions from the interviewed subjects.

The next to last chapter is the analysis of the results. This will analyze the information collected by the researcher and will compare it to secondary research in order to see if there are any common issues that reoccurred for the past ten years. The answers will be interpreted and will show the intellectual abilities of the researcher to interpret data and to present it.

The last chapter will conclude the whole research with conclusions and recommendations in order to solve the problems raised in the past chapters. This will be a critical evaluation of the topic and the data collected through this research. These recommendations can also be addressed officially to certain organizations or government.

CHAPTER 2 – LITERATURE REVIEW

2.1 INTRODUCTION TO THE FINANCIAL CRISIS AND RECESSION CONCEPT

The world is developing at a speed that we have never reached before. Population is growing, technology is evolving, needs are constantly changing. It is obvious that very soon the demand will outrun the supply power. The financial system around the world needs to change its regulations and do its best to prevent another future recession.

Starting 2007, many economies around the world have been worried that the credit crisis will spread worldwide through the financial system. Critical events like the fall of major banks in America made the last decade seem like no other until now. According to Judy Hoffman (2007: online), "crisis management requires more speed than ever before. […] Taking your time putting your story together and getting it out to the media is now a luxury we cannot afford."

Even though everyone was aware, more or less, of what’s coming, financially speaking, they chose to be silently worried, instead of communicate together and find a solution to prevent, rather than repair the crisis’ effects.

Although existing literature covers a wide variety of theories, solutions and cases, this review will focus on 5 major themes that appear throughout the literature reviewed. This research will provide an overview about the global financial crisis impact in the Eastern European hospitality industry, especially Romania; will establish the perception of the global financial crisis among the hoteliers in the Eastern European hospitality industry; explain and analyze the measures taken by the Eastern European hoteliers to stay in business during the financial crisis; to explore the potential customers experience regarding the financial crisis, as an opportunity for cheaper traveling; to draw conclusions and make recommendations for a future plan to prevent and prepare in case of another economic meltdown in the Eastern European hospitality industry.

Although the literature presents more or less these aspects in different contexts, this paper will mainly focus on the impact of the global financial crisis on Eastern European hospitality industry, especially Romania and its main competitor, Bulgaria.

2.2 WHAT EXACTLY IS THE FINANCIAL CRISIS AND WHO WERE THE VICTIMS

A financial crisis is the trigger for a recession. To better understand the impact of such an event, we need to understand what these terms mean.

When the rumor that the banks might collapse emerged, millions of people rushed to the banks to withdraw their money. Of course, banks didn’t have these enormous amounts of liquidities, so many of them hit bankruptcy. So, the supply of money needed was smaller than the demand.

The collapse of major private institutions, such as banks and insurance companies, started a chain reaction among all economic sectors. As the population found in the years to come, the recession began. This means a period of time of economic decline. This is usually followed by a fall in retail sales, high unemployment rate, etc. A recession is widely considered a part of the economy; no one can say exactly what its causes are. Also, the economy is not as bad as a depression, but it can evolve into one if nothing is done to stop that.

A financial crisis is hard and dangerous to predict. Many times, speculations were blamed to be a very important cause of the financial crises. Speculation is usually associated with economic bubbles.

According to Wikipedia (no date: online):

Speculative bubbles are characterized by rapid market expansion driven by word-of-mouth feedback loops as initial rises in asset price attract new buyers and generate further inflation. The creation of the bubble is followed by a precipitous collapse fueled by the same phenomenon.

2.3 THE GLOBAL FINANCIAL CRISIS, THE HOSPITALITY INDUSTRY AND ITS CUSTOMERS

Economy is a very confusing and twisted domain. "Unlike in the hard sciences; such as physics or astronomy, in economics, there is no foundation on which to base any probabilities about future events." (Skidelsky and Wigstrom, 2010:2)

During hard financial times, people tend to be more careful with their expenditures. They will direct their money to essential costs of life such as utilities, food, clothes, etc. Tourism and hospitality are part of the non-essentials costs of life. These are optional expenditures.

Entertainment, hospitality and tourism domain is very sensitive to market changes and weak economic status of a region.

In 2008 the people started to spend less on vacations, and be more careful with their money. According to Potriviti Inc. (2009) the hotel revenues fell by 1.4 percent and it was expected to go lower in the years to come.

A new type of travelers will emerge from this situation. Travelers that will spend less money, but will seek the best value for what they paid. Hotel businesses that will offer the most for a tighter budget will be the ones that will survive. They must adapt and adjust to this situation.

2.4 THE OUTCOME OF THE FINANCIAL CRISIS AND HOW WAS IT HANDLED BY THE HOSPITALITY PROFESSIONALS

The request for the upper scale end of the market is tending to decrease, while the request for the budget or the good value offers and services will grow. Airlines business and hospitality business especially need to quickly adjust to this trend. (Osa Amadi 2008: online)

Companies began to borrow money without being sure that they will be able to return them. This just made the financial crisis even more dangerous.

Nobody thought that the global economic crisis will hit Europe with such a force. McArdle (2011) argued that nobody imagined that a crisis can be as strong as this one is. On the bright side, this crisis refocused the attention on the fact that there is no mechanism for monetary transfers between weak and strong members of the European Union, and their impossibility to create interest rates appropriate for their statuses.

The current financial system and regulations are actually increasing the financial instability, rather than control it. It encourages the investors to make larger, more dangerous investments during the peak time of their businesses, and stop the money flow during the downturn.

Since nobody predicted the disaster that was about to come, there were no strict regulation regarding the banks financial system. Even more Rude (2008:4) outlined that:

…banks and other financial institutions have been encouraged to use their own internal risk measurement and management to control their risk on the basis of the mistaken notion that markets price risk correctly and that it is possible, in effect, to privatize the management and control of aggregate market risk. Financial stability is a public good that is not provided by the financial markets.

Governments need to find a solution to stop this uncertainty in the financial system in order to prevent future recessions. All the banks, institutions, markets and businesses must be ruled by a system of periodical control, comply with the bank’s needs, and constantly control the market risk. (Rude 2008:2)

In the actual economic status conditions, specialists look at tourism as one of the few sectors with the highest possibility in offering the growth and economic development at an international level. A rising sector of tourism can contribute efficiently in increasing the national income of a country, creating jobs and attract investors. Thereby, tourism can be an important economic growth engine especially in the developing countries, being a key element in reducing poverty and regional disparity. Despite its contribution for the economic growth, the development of the tourism sector can be slowed down by a series of economic and legal obstacles which can also affect the competitiveness of this sector.

Many countries which invested lots of money in their infrastructure and economic system failed to come on top during harsh times. This changed the perception on the methods of gaining a material advantage. Strictly referring to the production and selling of goods and services is not describing accurately anymore the complexity of an economic advantage. In this case, economic theories focused their attention on some additional factors which are capable to assure an economic advantage in the new market conditions.

Among these factors, are:

Proper legislation

Lack of corruption

Human workforce

Size of the market

Technical progress, etc.

Perfectly linking some of these factors can create an absolute economic advantage, and can be also transformed in a competitive advantage.

Along with the transformation of the economy in an interdisciplinary science, Weber (2003) analyzed the relation between culture and economic development and demonstrated that a really important factor with a great impact on the competitiveness among countries is represented by the system of values of a community.

In order to keep the competitiveness of a country, there are some essential criteria to follow. Some of them are:

Investments in the already existent infrastructure as well as in the technological field

Creating a balance between the proximity economy and the one based on globalization to assure a substantial level of wealth and accumulation, in the same time preserving the system of values of a community

Creating a stable and predictable legal environment

Being more aggressive on the market and attract direct foreign investors

Keep the level of salaries, productivity and taxes connected

Large investments in the education sector, especially post-university studies, and the perpetual training of population itself

Keeping a modern social structure by reducing the gap in the salary areas and to consolidate the middle class of population

Building an adaptable and flexible economic structure

Also, the competitiveness should be treated differently when the level is macroeconomic or microeconomic. Competitiveness is different when we talk about companies, rather than when we talk about countries or regions.

Analyzing the elements that help the development of tourism in different regions can be included in three categories: the legal environment and the laws that affect the tourism sector, business environment and infrastructure, natural, cultural and human resources involved in the tourism activities.

2.5 THE STATUS OF THE EASTERN EUROPEAN TOURISM INDUSTRY FACING THE ECONOMIC CRISIS

Based on the TCI (Tourism Competitiveness Index) analysis, in 2011, Romania occupies the 63rd spot out of 139 countries. This shows an evolution compared to a prior ranking, in 2009, when it was situated on the 66th position. The first place is occupied by Switzerland, and the last place, Ciad. Romania achieved the best score in the "safety and security" sector, 5.1 points out of possible 7, this being a little bit above the score Switzerland achieved.

In a relation to the European Union, tourism occupies an important role, especially regarding small and medium businesses, and its contribution to the economic development differs a lot from one region of Europe to another.

In some isolated areas, which are situated further from the urban areas, tourism is the only income source for the population there.

Studies confirmed that the Central and Eastern European regions represent a reliable source to revive the European tourism. Statistics show that Europe is the most visited region in the world. The quality of the infrastructure, the variety of geographic and cultural areas and the wealth of the natural resources, are just a few reasons for Europe to occupy this position. Also, the spreading of the European Union improved the touristic potential. It’s easier now to add new destinations to the circuits and checklists.

The economic crisis and the recession seriously affected the tourism environment. This reflected in a decrease of the number of foreign tourists and the incomes obtained from their vacations. This turned the international tourism into an internal kind of tourism. According to Demunter and Dimitrakopoulou (2011) in Romania the numbers fell by 11.1%, while in Bulgaria numbers fell by 29.5%.

After two consecutive years of contraction, the tourism in Europe began to show signs of improvement, starting 2010 when, the number of nights spent in a hotel were slightly increased by 2.8%, compared to 2009.

Unfortunately, Romania didn’t have any growth. Instead it continued the negative trend, achieving in 2010 a decrease of 8.7% of the number of nights spent in a hotel, compared to 2009.

In the European tourism context, Romania occupies the 34th position out of 42. One of its main competitors, Bulgaria, is situated 7 positions higher, in the 27th position.

Even more, an analysis of the impact of the financial crisis, in the period 2007-2009, demonstrates that the most important destinations such as Spain, France, Italy, Germany, Greece or Ireland were in the middle of the recession, one of the few gainers from this, from the Euro Zone, is Bulgaria. In the period of 2009-2011, Romania managed to climb 3 positions in the TCI chart, fact that can suggest a proof of rising efficiency of communications in tourism.

Regarding its main competitors, neighbor countries or countries in the same region, we can observe that Romania is not situated in a favorable spot, being severely overwhelmed by its West neighbor, Hungary, and also by its direct competitor on all touristic markets, Bulgaria. This is even more surprising, regarding the fact that some of the better placed countries (Czech Republic, Hungary, Poland, and Slovakia) don’t benefit of the opportunity of having a seaside that can be used for touristic purposes.

The political climate and institutional environment have a decisive effect on the appealing factors of a region or country. Usually, tourists are very sensitive at the security and safety reports, any negative information can create a halo effect among them. A good example is the case of Egypt. Starting 2000, Egypt oriented its economy towards the hospitality sector, becoming one of the most visited destinations with 12.5 million foreign visitors and a 10.8 billion income. This changed dramatically when the 2011 riots started in Cairo. This was so serious that the tourists visiting the country at that moment had to be sent home and reduced dramatically the number of future potential tourists.

Regarding the legal and safety environment of Romania, it is perceived as a country that does not implicate major risks of security for tourists.

Romania and Bulgaria are also in a good light because of the fact that they are EU members. According to the World Economic Forum (no date: online), Romania is situated above Bulgaria at six of the specific laws and rules points, being surpassed at only two out of the ten points. We can see that Romania managed to gain a better image than its direct competitor regarding the law environment, this making it a more attractive area for direct foreign investors, including the tourism sector. On the other side, the unclear government decisions and the high transaction costs necessary to start a business affects the Romanian business, which makes Bulgaria look better.

Lately, the Romanian government did some changes in order to attract foreign investors and business, but the poor marketing didn’t make them known to the public at large. In the same time, Bulgaria encouraged the emerge of new business by reducing the minimum social capital from 5000 leva to 2 leva, and the data shows that this country is situated among the first 10, which means it will attract investors faster.

In the end there is no real competition between Romania and Bulgaria. Even though Romania did serious efforts to improve the business environment to attract tourism investors, it didn’t have a strategy to let them know about these opportunities. Due to these facts, Romania couldn’t use the advantage of its good geographical position, natural and cultural resources or the high quality of the human capital. Even though the development strategies of tourism are, at least on paper, meet the basic principles of a sustainable growth in this domain, they are not practiced, even more they are not even transmitted to the target market through appropriate communication methods and techniques.

For this reason, the Romanian market, as a provider and beneficiary of touristic services, doesn’t have the mentality of protecting the environment and to develop sustainable structures. In the end, the economic crisis offered a new impulse to Bulgaria which turned out to be, once again, much more determined in using its competitive advantages on the international tourism market. In this case, Bulgaria, unlike Romania, represents an example of good management regarding the developing of some good and viable strategies in the evolution of tourism and the ability to communicate them efficiently in the right direction, at the right time.

But the recession is not over yet, which means additional measures must be taken in order to bring more tourists and business in all countries. Emerging countries in Eastern Europe have the potential of doing this, but it needs clear laws and a clear financial system. Also, it needs marketing to present the advantages of investing in a region for potential investors.

According to Euromonitor International (no date: online), 13 of the 27 European Union (EU) countries are predicted to fall into recession (defined as two consecutive quarters of negative real GDP growth) in 2012 as demand remains subdued.

In Greece, the crisis continues, and with all the riots and problems, it might be forced, in the end, to leave the Euro Zone. But lately the focus moved on Spain, which became the main subject for the financial turmoil as their financial system is crashing. But there is also a positive view regarding the recession: the weakening of the Euro in front of other major currencies might attract more tourists from overseas such as North Americans.

If Greece will finally exit the Eurozone, Euromonitor International (no date: online) estimates that "hotel performance in value terms would decline by as much as 3.6%." The value of the sales would fall, as people begin to travel less and those who would still do it, will look for the best deals.

The recession would hit the most the luxury sector in particular. The hotels that are oriented to leisure travelers would be less affected. It is hard to think that a strong recovery will happen in the luxury hospitality domain.

According to the Central European Review of Economics and Finance (2011) the average rate around the world for a hotel room was 14% lower in 2009 than in 2008. Actually, an average hotel room was cheaper in 2009 than it was in 2004. In Europe, rooms cost 13% less during 2009, compared to 2008.

According to the World Tourism Organization (no date) the international tourist arrivals rose again in 2010 and have returned to their pre-crisis peak level.

The next years will be though for the European hotel industry, especially for hotels, because there will be a lag and will trail the economy for at least six months before it goes back to normal. Euromonitor International (2012)

In the current economic situation, being so uncertain, tourist will still look for best deals and bargain offers. European hoteliers might be forced to offer major discount prices during the season if the occupancy doesn’t show signs of improvement. Aggressive offers, such as free sightseeing, spa deals and free nights are expected to be available.

CHAPTER 3 - METHODOLOGY

3.1 Introduction

This chapter will explain the methods used to collect data as well as the conceptual framework. It analyses the research questions and objectives set in the beginning and discusses the best methods to be used, regarding the aim and the nature of the research.

The purpose of this methodology chapter is to find deeper information regarding the reaction of the hospitality business industry to the global financial crisis. It will try to emphasize the best decisions that saved some of the brands, and even increase profits for the others; and the bad decisions that led to a bad business period or even the collapse of some major players in the industry.

Being an empirical type of dissertation this study will have a strong literature base and also requires the researcher to collect primary data using qualitative or quantitative methods. Primary data refers to data that the researcher will have to collect and does not exist already in the literature. The primary data in this research will be collected using a qualitative method, in this case a standardized open-ended interview. It was established that this will be the best method because ‘participants are always asked identical questions, but the questions are worded so that responses are open-ended. (Turner, 2010:756)

A deductive approach will be used in this research since it will be based on laws, facts and figures and certain principles. The research will also focus from general info and subjects to more specific. Conclusion will follow from facts and the collected data.

3.2 Secondary research

Secondary research is one of the most used methods of data collection in most types of researches. This method involves accessing and using data that is already collected in specialty literature by other. It is very important to acknowledge other people’s work, since plagiarism is a very serious issue. Secondary research is acquired using primary research or from third party sources such as company’s websites, articles or other official documents.

The reasons why so many researchers choose to use secondary research are: low or no costs to acquire, ease of access, may clarify the research question and may point out the difficulties that can appear in the primary research.

There are also disadvantages in using it, such as: the quality of the information is not guaranteed (it must be closely analyzed to make sure it’s reliable), not specific on the researcher’s topic, the information might be incomplete. It is the researcher’s duty to find, minimize and overcome the disadvantages in secondary research and use only the advantages.

3.2.1 Literature search

This chapter will try to find similar research methods in specialty literature around the world, to find out if there are similar studies for this in other regions. This research wants to emphasize that hotelier’s measure and decisions are different from region to region.

There will be several databases in which the researcher will look for information regarding this topic:

Manchester Metropolitan University Library

Google Scholar

Hospitality, Leisure, Sport and Tourism Network Research Gateway

Local libraries

Google search engine

Local business and leisure magazines

Academic articles

Romanian Government Websites

The key words used will be: qualitative research, methodology, empirical research, financial statistics, open-ended questions, and interview.

3.2.2 Literature review

The methodology used will have a strong literature base, since there are many writings about the interview, as a qualitative research. The research will try to comprehend as many principles and characteristics of a successful interview, but not making it too complicated, so the interviewee can focus more on the answer he gives, and not on the question.

Patton (2002:213) best outlines that:

The implication of thinking about purpose and audience in designing studies is that methods, no less than knowledge, are dependent on context. No rigid rules can prescribe what data to gather to investigate a particular interest or problem. There is no recipe or formula in making methods decisions.

3.3 Primary research

3.3.1 Secondary data

Since the researcher did not collect the data himself, it is very important to get familiar with it and be aware of how the data was collected and how accurate it is, if the population sample is within the research’s limit, etc.

The biggest advantage of the secondary data is the economic one. Somebody already did all the research, quantitative or qualitative, and now it’s easy to access. Also, a big advantage is the fact that it is easy to access. It is highly possible that the researcher can found secondary data collected by someone more professional, so the approach can be more effective.

3.3.2 Primary data

Primary data is the information collected by the researcher himself. This can be very effective, especially used for a qualitative research, such as this one. The purpose of collecting primary data in this research is to use specific information from specific people in the industry the researcher is focused on.

This research is hoping to achieve in-depth opinions and information, in order to elaborate a theory and make future recommendations.

There are 2 types of research: quantitative and qualitative.

A quantitative research is focused on testing a theory using precise data, such as numbers, statistics, etc. The objective of such a research is to see if, in the end, the predicted theory is true and accurate.

A qualitative type of research is quite the opposite. It is based on a process that pursues the understanding of a behavior, problem or cause. It will also be viewed from different perspectives in order to cover all possible causes and effects.

3.3.3 Research Instrument Design (RI)

The RI used for this research is the interview. Collecting data through an interview means talking and listening to people in order to filter the necessary information and see if there is a pattern, some unexpected info or just interesting information regarding the research topic.

O’leary (2004) best explains that it is not easy to collect credible data. There are no definite criteria in selecting if a method is better than the other. Each of them needs to be analyzed and considered according to the researcher’s goals. Pros and cons of the available research methods should be weighted to select the best one.

This interview-based data collection instrument will try to understand the general view of the hotel managers in Romania regarding the global financial crisis and how did they manage it. The researcher will also try to find a pattern or significant differences in the measures taken by hoteliers to face the financial status of their businesses.

McNamara (2009) suggests several recommendations for an effective research. The questions for the interviews should accomplish at least some of the following characteristics:

- The wording for the question should be open-ended, so that the interviewees will be able to choose their own words when they answer

- The interviewer should be as neutral as possible, and so the questions. The interviewer should not influence the answers in any way

- The interviewer needs to ask one question at a time, so the subject will not feel rushed, and he will be able to give the full answer

- The questions should not be confusing and stated clearly

- One of the most important questions is ‘why’. The interviewer should always ask follow-up questions if he thinks it is relevant

3.3.4 Piloting the Research Instrument

Prior to use the actual research instrument on the targeted population to collect data, this should be refined in order to eliminate possible errors or to improve it. It doesn’t need to be done at the same scale as the actual research, since the purpose is to refine the method, not to collect the actual data.

The pilot test will be done on fellow 3 to 5 researchers who are using qualitative type of research also, in order to see if there is need for improvement and if their feedback is somehow similar.

3.3.5 Sampling Strategies

The information for the research will be collected from 4 to 6 people in the hospitality industry, preferably managers, using in-depth interviews. In order to correct any errors before the actual interviews, a sample population is needed. The sampling strategy might evolve in different ways. A general view of where and what population should be used in the beginning will be provided by soliciting a few situations through convenience procedures. Successive sample units will be selected based on what has already been selected. The sample will be adjusted according to the concept of the research. The sampling will continue until the targeted number of sample methods is achieved. The final form of the sample may include confirming or disconfirming statuses.

3.3.6 Conducting the Research

The method used by the researcher for the data collection in this case is the structured interview. All the interviewees will receive the same questions in order to see how different the management techniques are, even though the questions are exactly the same. Structured interviews are ‘…interviews in which all respondents are asked the same questions with the same wording and in the same sequence.’ (Corbetta 2003:269)

Each interview will last approximately 30 minutes in order to be comprehensive enough and gather sufficient data. The interviews will be mostly addressed by email, but the researcher will also try to get a position in some manager’s busy schedule in order to get a face-to-face interview. According to Purdue Online Writing Lab (2010: online) ‘face to face interviews are when you sit down and talk with someone. They are beneficial because you can adapt your questioning to the answers of the person you are interviewing. You will need recording equipment for the interview, and it is highly recommended that you bring two recording devices with you in case one fails.’

Purdue Online Writing Lab (2010: online) also states that ‘email interviews are less personal than face-to-face or phone interviews, but highly convenient for most individuals. You may not get as much information from someone in an email interview because you are not able to ask follow-up questions or play off the interviewee’s responses. However, email interviews are useful because they are already in a digital format.’

The researcher concluded that an interview is the best process to collect primary data, because:

The interviewer can clarify anything that is unclear

This can be used to identify people that will be willing to talk about the subject deeper

The answers are more reliable since the interviewee will feel that the interview is made for him individually

It is easier to analyze and draw conclusions out of it and make recommendations

The interviewer can build follow-up questions if an interesting subject emerges during the process

There are several characteristics that should be met for an interview to be successful:

Choose a location with a relaxed ambient and little distraction

Explain the main objectives of this interview

State the terms of confidentiality

Explain the structure of the interview

Inform the interviewee how long the interview usually takes

Leave a contact form, so they can contact the researcher afterwards

Find out if they have any aspects to clarify before the interview starts

Take notes or record the interview in order to have all the information exactly how they gave it to you

During the interview, the researcher should remain as neutral as possible, so the information will remain genuine. Also, this will make the interviewee to be more relaxed and give more personal answers.

Questions should be asked one at a time, so they don’t get mixed up and the information collected is specific. The researcher should encourage the responses with occasional nods of the head, this way showing that he is actively involved in the interview.

There should also be a transition between topics, so the interview will be fluent and have a narrative flow. The researcher must never lose control of the interview, but he shouldn’t show this in an aggressive way.

3.4 Data Analysis

3.4.1 Qualitative Data Analysis

Analyzing the collected data is basically not a complicated task. " It consists of three parts: Noticing,

Collecting, and Thinking about interesting things. Figure 1 represents the process and the

Relationships among its parts:

Fig. 3.1

As the figure shows, this is not a linear process. Seidel (2008) best explains the three phases of the process. Iterative and progressive means that it is a cycle process, which keeps repeating. As an example, when the researcher thinks about new ideas, he starts to notice new things along with the main idea in the data collected. After that, the researcher collects new data about those new things. This is an infinite process.

A recursive process means that at one point of the research, there might be the case to go bag to what you previously stated.

A holographic process refers to each step of the entire process. As an example, when the researcher first starts to notice things and analyze them, he already, involuntary, is collecting data about those things.

As the research continues, the researcher will observe, find and collect things. It is also very important to sort them, in order to make sense. This process is similar to a puzzle. The researcher must find the pictures and make them fit for the final picture. Some of the pieces will fit in their place by themselves, some of them will be harder to find and fit. Seidel (2008) also outlined that in Qualitative Data Analysis the pieces need to be adjusted to fit the puzzle. This will happen as the researcher analyzes the data.

CHAPTER 4 – ANALYSIS OF THE RESULTS

4.1 Introduction

In any research, regardless the domain, the researcher must collect data in order to analyze it. Based on this analysis, the researcher can do further recommendations, draw conclusions or offer solutions regarding the subject and the objectives.

According Holt (no date: online) organizing and collecting data may result in different forms, depending on the type of information the researcher is looking for. The method the researcher uses in order to collect data should be connected on how the researcher plans to analyze and use it. Regardless of what is the method used, the recording of the data should be done in the same time with the data collection, so the risk of losing anything is reduced to a minimum.

The researcher must collect data from all the possible sources, no exception, in order to have enough of it to be analyzed. There is no such thing as a "bad source" or "too much data". All feedback must be taken into consideration.

The purpose of this chapter is to find out and analyze the reactions and adaptability of both parts: sellers and buyers. After all, this is the main idea of the hospitality industry. But it is more complex than this. The hoteliers must find cheap ways to attract tourists. Since the financial crisis began in 2008, people are willing to spend less and less money on unnecessary things. They are focusing on the essential costs of life. But the hotels also need to stay in business, and they can’t rely only on rich people. In order to find out how the hoteliers managed to offer more for less, this research will analyze the responses from important people in the hospitality industry, collected through structured interviews, in order to get different reactions and mentalities, to the same questions.

This research will also investigate if the changes are major starting 2008, minor or inexistent. To gather this information, the researcher will spread short questionnaires with essential questions regarding the way that the average customer adapted to traveling in this constantly changing industry. How did the customer perceived the change coming from hoteliers, and what are they doing different now.

Since important people, such as managers or owners of hospitality establishments, are constantly busy, and the interviews will be most likely be done by telephone or email. The only draw will be the impossibility of asking follow-up questions. The interviews will be addressed to managers in 3 and 4 stars establishments around Brasov area and Iasi area, both business and leisure hotels.

Collecting data from tourists is, in theory, easier, since they are many more than managers and they will be more willing to complete these questionnaires since they are very short and concise. The main condition in order to complete this survey is to be at least 18 years old, and mentally able to complete them. Both for the interview and surveys the data collected will be confidential.

Since the research will include both qualitative and quantitative data, the researcher needs to understand and organize the data first. The quantitative data is easy to organize since it can be coded as numerical data. Hall (no date: online) argues that in a qualitative study, coding refers to the fact that the researcher needs to identify themes in the documents, interview notes or other sources, that commonly relate to the research topic.

Holt (no date: online) also describes the interpretation of the results as a process of evaluation. The main idea is to evaluate if the methods used are working or they are making a difference.

4.2 Categorizing the data collected

The researcher must reevaluate and review the purpose of the research and what questions it must answer to. In this research, the researcher will focus the analysis on how all the individuals responded to questionnaires or open ended questions. The researcher must look across all data in order to analyze the important ideas collected and find the differences and similarities between their responses.

The researcher might start with some preset categories and then search the data for these categories among the data collected from the respondents. These will provide a direction of what a researcher is looking for.

Another way is to read through the text and find themes that recur in the data. This way you might find ideas or issues that you didn’t think about yet.

This approach will allow the categories emerge from the data collected, instead of creating them in advance. Sometimes, these two methods can be combined in order to get more points of viewing this analysis. Both of them might change along the way since new information is found.

Powell and Renner (2003) states that the researcher should continue to build new categories until no new categories or subcategories are identified. The researcher can add as many categories he needs to interpret the data clearly. Sometimes the same piece of information can fit into two or more categories. Reanalyzing the data will help the researcher to decide if the data is correctly categorized.

Powell and Renner (2003) suggests that while the researcher is trying to create as many categories he needs in order to separate all the information, sometimes he can fit the same piece of information in two or more categories. This way he might be forced to create cross-categories in order to collect all the information and have a clear view of it. The researcher needs to read the text over and over again in order to be sure that the data is correctly categorized.

4.3 Qualitative data and quantitative data

There are two types of data we can collect: qualitative data and quantitative data. Qualitative data is information that is not collected directly in the form of numbers, statistics or other exact measuring unit. This kind of information is gathered as narrative data. This can be obtained through interviews, observations, notes, etc. In order to be able to analyze it, the researcher must prove his intellectual capacity in understanding this information and be able to make it proper to be presented, so that someone who will see it for the first time will understand it right away.

Quantitative data is information gathered as numbers, statistics or other exact unit of measure. This can come from questionnaires, surveys, official statistics, etc. Holt (no date: online) states that using quantitative data allows you to compare precise characters, changes in certain variables or population. The researcher will also be able to see if the degree of reliability was affected by its intervention, program or another factor.

Sometimes, qualitative data can bring out things that quantitative data can’t. It may reveal the malfunctions of other methods, and also discover if the problem is with the researcher or the methods used by him. Maybe the methods he uses, the questions he asks are in conflict with the participant’s culture, ideas or simply not interesting to him.

On the other hand, quantitative data is neutral, objective without any human involvement attached to it, because it depends on analyzing and comparing exact numbers and characters.

During a research, the interviewer will use questionnaires and interviews as a research tool. In order for the information to be useful, the research methods must be tested for validity, reliability and acceptability.

In order to classify a research tool as being "valid", it must cover the entire meaning of the research topic, but in a balanced way. The researcher can as some questions after the questionnaires and interview to see if their responses will match the ones stated earlier. However, these must be formulated differently, but have the same meaning.

Testing a research tool for reliability is not so easy. Williams (2003) says that the reliability is an assessment of the consistency and duplicity of the selected instrument. It is indicated, if possible, to ask the same question again, after two or three weeks to see if the answers will match. This, however, must be done assuming that the circumstances didn’t change a lot in the meantime.

Using qualitative methods can determine the acceptability of a research tool. The researcher can either ask the subjects used for the pilot test to write their comments on a separate paper or you can ask them how long it took them to complete the questionnaire.

4.4 Analysis of the results

By the time the researcher will arrive at this stage, he already must have chosen a topic, decided what he needs to investigate and collected the data he was looking for. Now he must evaluate and analyze what he discovered so he will be able to present it to an audience.

This section must tell the reader what the researcher has found and it allows the researcher to give some ideas of what he will further discuss in more detail. Also, this will show how the research contributes to the existing information in this specific domain.

The researcher must follow three stages in order to analyze the results properly. First, he needs to organize his data. Second, he needs to describe the data in the simplest form possible. In the end, the analysis needs to show and highlight significant findings and test a hypothesis.

4.4.1 Analysis of the returned questionnaires

What is a questionnaire? Malhotra (no date: online) best explains saying that "a questionnaire is a formalized set of questions for obtaining information from respondents."

The researcher developed a 10 question questionnaire in order to be short, but comprehensive. The people are always in a rush, so a long questionnaire might seem boring to them or they might not have the time to complete it accurately.

The researcher has 50 returned questionnaires, both virtual ones and real ones. The virtual ones were spread through different online communication tools, such as email, Facebook and other. The real ones were handed to different people, of different ages, gender and social status. All of them agreed to the terms and conditions presented and they are assuming their choices.

For each question of the interview a pie chart is attached to better understand and present the results of the current survey.

To gather the information needed in order to find out how did the crisis affected the tourists and their choices the researcher needed to develop a questionnaire. This questionnaire helped the researcher to gather suitable information to elaborate some recommendations regarding the hospitality industry. After the analysis we noticed that the answers were surprising and unexpected. We also found that the reactions were very different from one person to another.

At the first question the research provided useful information regarding how often did the tourists travel before the financial crisis? We found out that 40% of the people who filled the questionnaire traveled an average of two times per year. Another 36% traveled only once per year, while 20% traveled more than three times per year. This means that people used to spend a decent amount of money and time on traveling, a personal pleasure and not an essential expense.

With the second question, the researcher tried to find out how did the financial crisis affected the tourists and their options to travel. The time span for this question is the past 4 years, from 2008 to 2012. According to the literature and secondary research the researcher searched, there should be a decline of this aspect, since people became more careful with their money, choosing to spend them carefully and avoiding unnecessary expenditures. Surprisingly, 36% of the people traveled twice and more than three times per year. This shows an increase of traveling in the tourism industry. This might be due to better packages that hoteliers are forced to offer. Also, most of them are leisure travelers, while the business traveling is still going down.

The next question reveals that the Romanian tourists choose to travel more abroad than in their own country. According to the survey, 64% of the people that filled the questionnaires traveled abroad, while only 36% traveled in Romania. This is worrying, since the tourism should be cheaper and more attractive for natives.

With the recession hitting hard the economy and affecting badly the hospitality industry, travel agents, booking sites and hoteliers had to come with something new in order to stay in business. Asking the people if they found more attractive packages in the past 3 years, 80% of the people said they did. This shows that the hospitality industry is forced to adapt to this new breed of customers. Coming with better offers, the hoteliers tend to shake of the recession effects and trying to revive the tourism.

When people were asked what category of hotels are they choose now, 62,2% of the people said they are choosing to stay at 4* hotels, while 34,8% chose to stay at 5* hotels and 52,2% chose the 3* hotels. This shows that the people are expecting to get the same services and values for a lower amount of money. This also shows that people are not willing to downgrade, but rather to get better accommodation with the same amount of money or even lower.

People are also picky when choosing the accommodation and the package for their traveling options. The first priority when booking a hotel room is the services included in the package, 44% choosing this first. The location is the second thing that the tourists are focusing on, with 24% checking this as the second most important thing. The price is only the third most important factor, with only 20% being concerned about it. This shows that tourists are still willing to pay more for better services and location.

As stated before, hoteliers are more flexible and tourists noticed this. With 75% of the people agreeing with this, the hoteliers are getting the results they were looking for. This can be either because they became desperate at some point in the process or the uprising competition that the market forced.

Planning a vacation can be done in several different ways. According to the questionnaire’s results, booking websites are still tourists’ favorite. The research shows that 45% of the respondents are using this tool when they are booking their vacation. Ease of access, secure payment, ability to compare multiple offers and many other features are the main reasons for choosing it. The research also revealed that 30% of the respondents are reaching a travel agent to take care of their vacation. This is usually an option for tourists that don’t mind paying extra taxes to travel agents. With only 25% of the total share, the hotel’s website is the last option when it comes to plan a trip. This should raise a question mark to the hoteliers since this situation is present for a long period now. Hotels should invest more in trying to attract tourists on their websites and make them pay the rooms directly to them.

Marketing division is the engine of such a business. If tourists don’t know about you, they will not choose you. Surprisingly, 90% of the respondents said that they are looking online to find special offers. Only 7% of the respondents are aware of different hotels from TV commercials and 3% from promotional flyers. The hoteliers should invest much more money in the marketing division. A lot of potential customers, especially elderly people, are watching TV most of the time. It is a powerful marketing tool which can be really effective.

Many hotels, especially high-end ones, have multiple services for their guests. Some of them are necessary; some of them are just an extra caprice. During the research, 74% of the respondents answered that they are willing to drop some services in order to obtain a better room rate per night. This shows that for most of the tourists, the price is still one of the most important factors in making a decision. Also, 25% of the respondents are not willing to drop any services for a better room rate. This usually applies to the upper class customers.

4.4.2 Analysis of the interviews

The difference between qualitative data (ex. Interview) and quantitative data (ex. Questionnaire) is that the information comes in the form of words and observations, while the information for qualitative data comes from precise numbers and figures. The purpose of this interview was to find out how the crisis affected managers in business did and what measures they had to take in order to make profit and attract business while the market is on a downfall direction.

The research revealed interesting ideas through the interview, since some of the responses were really surprising. The subject is the GM of Traian Hotel, located in Iasi, Romania. He is in charge of this establishment starting 2004. The subject had approximately seven years of experience in hospitality. The education is a founding base of knowledge and the subject had a strong one, presenting a Bachelor’s Degree Diploma in Tourism. He is seeking in obtaining a Master’s Degree in hotel operations.

Their specific target market is the business tourism. Business people traveling for work purposes. The subject is well aware of the competition, especially for leisure travelers. He knows that leisure tourists are usually choosing cheaper hotels or rent apartments. He also observed that renting apartments in hotel regime is an ascending trend in hospitality. He is also confident about the hotel’s strategic placement and facilities. Business travelers are choosing it because of its location and its services.

Internet is the best tool for now to get in touch with previous, current and future customers. The manager knows that so he is keeping the hotel’s page up-to-date in order to avoid misleading info. The tourist has numerous ways in booking a room with them and they can also see previous customer’s reviews. The subject is well aware of this fact and he is encouraging new customers to check previous comments, since they are almost perfect. One of the things that stood out is that they are constantly improving. They have questionnaire cards which can be completed by the customer at departure in order to find out what they need to improve. This is a relatively cheap way of study the market.

The subject cannot deny that the financial crisis was a true challenge. He agrees that it affected the whole world and created a new market with new customers and trends. He is aware of the economic instability and implies that the hoteliers should always act like there is a financial crisis and cut unnecessary expenditures. The subject also acknowledges that there is a bright part in this whole economic crisis; it made him a better manager.

He knows that upper class hotels like his are most likely to be hit by economic factors, since they have much bigger maintenance costs than small hotels. The subject appreciates and encourages small, uprising hotels that are focusing on offering the basic services a hotel needs.

A huge advantage for this hotel is that it is a private property with no banks behind it. Many hotels which were sustained by some background banks collapsed in the first years of recession.

Since the financial crisis was basically a chain reaction, the managers needed to renegotiate the prices with all the suppliers and service providers. The biggest change in order to reach a wider target market, was to change a part of the hotel itself from a 4* establishment, to a 3* establishment, but without affecting the services, looks or features present in the previous configuration. This made them more "visible" for people with limited budgets and leisure travelers. Also, the hotel is now offering guests free parking, free Wi-Fi internet and access to the pool and gym. This also confirms the questionnaire results saying that hoteliers are more flexible and that they are offering better packages.

The hotel is also known for accommodating important personalities and politicians. The subject says that there is a constant flow of customers, but he noticed that there were changes in their options during the recession. The number of nights decreased and some of them excluded some services in order to get better room rates. The big advantage is that the city is not so big, and the competition is not very tough in this category.

Another innovative thing for the Romanian market is implementing a reward program, similar to the big chain hotels. Also, the payroll had to be diminished a bit in order to cut the expenditures. The costs reduction applied also on the technological side of the hotel, by using LED lighting which is more efficient and long lasting.

This interview also confirmed a problem stated before, that the Romanian government has a minimum implication in the hospitality industry. The subject stated that "the government, as usual, had a little to none implication in this sector. The hospitality industry is mostly on its own in this country. They need to start promote this country and make a good use of its geography and culture. It is very important and we have a lot to offer."

4.5 Summary

In this chapter, the researcher presented primary data obtained from questionnaires and interview at Grand Hotel Traian, Iasi. This analysis gathered together all the obtained data collected through the interview and the questionnaires with the secondary data to produce key findings and data.

In the next chapter, the researcher will conclude all the information gathered from the primary and secondary research and will provide overall conclusions and suggestions of the dissertation.

5. CONCLUSIONS AND RECOMMENDATIONS

5.1 INTRODUCTION

This final chapter’s purpose is to present conclusions and make recommendations based on the information obtained through primary and secondary research of this paper in relation to the aims and objectives stated in the beginning.

In order for the researcher to accomplish this, he must argue every objective separately. The conclusion of each objective will be presented in the first part of this chapter. In the end, the researcher will make recommendations for the government, hoteliers and other significant institutions, if it will be the case.