The importance of research in challenging times.(From the Editor)

A Year after the subprime market crisis erupted in the United States, the global financial market continues to be fragile, undermined by the damage to financial institutions. The financial market crisis has raised uncertainty and dampened growth prospects around the world. This crisis has been affecting the worldwide economy, which was already slowing.

The world economy can be categorized as the slow-growth wealthy OECD (Organization for Economic Cooperation and Development) nations, the more rapidly expanding economies of the large emerging countries sometimes referred to as the BRICs (Brazil, Russia, India, and China), and the smaller and volatile economies of developing nations. Unlike many previous postwar financial upheavals, which were centered in emerging markets, this one is playing out in markets and institutions situated in the world's leading financial centers, chiefly in the United States and Europe. As a result, it puts the entire global economy at risk. Even though the recent turmoil in credit markets has primarily been felt in North America and Europe, the financial stresses also affect economies outside the OECD zone, including the BRIC countries. Although the BRIC economies are less correlated than are those of the United States and Europe, there is no question that these nations will feel the consequences of Wall Street's rush for profits.

In addition to the real estate and banking industries, this year's events have shocked the travel and tourism business, which is feeling the economic pullback. You can read two analyses of the slowdown in the United States in this issue's columns, written by Randell Smith, of Smith Travel Research, and Mark Woodworth, of PKF Consulting. Both analyses portend an extended dry spell for U.S. operations, and by implication for other OECD countries. This slowdown should affect the BRICs to a much lesser extent, while the exact impact on developing countries, while expected to be minimal, is not known. At this writing, there appears to be continued investor interest in emerging markets.

At this point, the die is cast, and no one has any choice but to let the financial issues work their way through the world economy. That said, now is the time to develop strategies to minimize the pain associated with the downturn and to begin planning for the industry's recovery, not only in the United States, but worldwide. One key mechanism to accomplish this is research, particularly research focused on operational and financial efficiencies and on the world's less developed economies. We also need research on recent trends in the global industry, including the higher growth rate in chains relative to independents, the expansion of the hotel industry in the BRICs and the Middle East, and the effects of the credit crunch and the expense of financing on the private equity funds that have been the most important buyers of major hotel properties, portfolios, and chains.

Researchers have often spent little time on the particular issues that face hotels and restaurants in difficult times and in developing nations. The articles in this issue of Cornell Hospitality Quarterly represent a first step to fill that gap, particularly with the seminal studies in previously overlooked nations. I urge researchers everywhere to follow up these preliminary findings with further research that will help improve tourism operations in all nations.

Print Get the Mag Weekly Updates