Impact of COVID-19 on the travel and tourism industry

Marinko Skare, Domingo Riberio Soriano and Małgorzata Porada-Rochoń

Technological Forecasting and Social Change, 2021, vol. 163, issue C

Abstract: Our paper is among the first to measure the potential effects of the COVID-19 pandemic on the tourism industry. Using panel structural vector auto-regression (PSVAR) (Pedroni, 2013) on data from 1995 to 2019 in 185 countries and system dynamic modeling (real-time data parameters connected to COVID-19), we estimate the impact of the pandemic crisis on the tourism industry worldwide. Past pandemic crises operated mostly through idiosyncratic shocks' channels, exposing domestic tourism sectors to large adverse shocks. Once domestic shocks perished (zero infection cases), inbound arrivals revived immediately. The COVID-19 pandemic, however, is different; and recovery of the tourism industry worldwide will take more time than the average expected recovery period of 10 months. Private and public policy support must be coordinated to assure capacity building and operational sustainability of the travel tourism sector during 2020–2021. COVID-19 proves that pandemic outbreaks have a much larger destructive impact on the travel and tourism industry than previous studies indicate. Tourism managers must carefully assess the effects of epidemics on business and develop new risk management methods to deal with the crisis. Furthermore, during 2020–2021, private and public policy support must be coordinated to sustain pre-COVID-19 operational levels of the tourism and travel sector.

Keywords: COVID-19; Pandemic crises; Panel structural vector autoregression (PSVAR); System dynamics; Tourism industry; Financial cycles (search for similar items in EconPapers)
JEL-codes: E32 G01 H56 L83 Z32 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (68)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:tefoso:v:163:y:2021:i:c:s0040162520312956

DOI: 10.1016/j.techfore.2020.120469

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