Responsible Recovery from COVID-19: An Empirical Overview of Tourism Industry

Jong, Meng-Chang and Soh, Ann-Ni (2021): Responsible Recovery from COVID-19: An Empirical Overview of Tourism Industry.

Abstract

Over the past few decades, the world has seen a stunning transformation of the tourism industry. The tourism industry is one of the world's largest and fastest growing economic sectors. Thus, it is one of the key economic drivers in most developed and developing countries. Despite the rapid growth of the tourism industry, it is considered a vulnerable industry because it must accommodate the demand changes of tourists, shifts in economic environmental and other unexpected factors such as natural disasters and crises, especially the recent COVID-19 pandemic. Therefore, this paper aims to review the key determinants affecting tourism demand. In general, the tourist arrivals and tourism receipts have been chosen to proxy tourism demand in the existing literatures. In modelling tourism demand model, the independent variables consist of f income level of the tourists, tourism price, exchange rate, transportation cost, word of mouth and other key parameters. Various techniques such as ARDL, Markov-switching, and panel analysis have been utilized in previous studies to investigate the dynamic relationship between the variables in tourism demand model. The recent outbreak, COVID-19 is leaving tremendous impacts to the world economy, especially the tourism industry. In sum, the research on pre-crisis, mid-crisis, and post-crisis are equally important in gathering information for future tourism recovery and development plans.

• Item Type: MPRA Paper
• Language: English
• Keywords: COVID-19; Tourism demand; Tourism restart; Tourism recovery
• Subjects: C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C10 - General; C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C32 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes ; State Space Models; C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C33 - Panel Data Models ; Spatio-temporal Models; I - Health, Education, and Welfare > I1 - Health > I18 - Government Policy ; Regulation ; Public Health; L - Industrial Organization > L8 - Industry Studies: Services > L83 - Sports ; Gambling ; Restaurants ; Recreation ; Tourism

References

Aki, S. (1998). A compact econometric model of tourism demand for Turkey. Tourism Management, 19(1), 99-102.

Chaiboonsri, C., Sriboonjit, J., Sriwichailamphan, T., Chaitip, P., & Sriboonchitta, S. (2010). A panel cointegration analysis: An application to international tourism demand of Thailand. Annals of the University of Petroşani, Economics, 10(3), 69-86.

Chaisumpunsakul, W., & Pholphirul, P. (2018). Does international trade promote international tourism demand? Evidence from Thailand’s trading partners. Kasetsart Journal of Social Sciences, 39(3), 393-400.

Dube, K., Nhamo, G., & Chikodzi, D. (2021). COVID-19 pandemic and prospects for recovery of the global aviation industry. Journal of Air Transport Management, 92, 102022.

Foo, L. P., Chin, M. Y., Tan, K. L., & Phuah, K. T. (2020). The impact of COVID-19 on tourism industry in Malaysia. Current Issues in Tourism, 1-5.

Fotiadis, A., Polyzos, S., & Huan, T. C. T. (2021). The good, the bad and the ugly on COVID-19 tourism recovery. Annals of Tourism Research, 87, 103117.

Gulistan, A., Tariq, Y. B., & Bashir, M. F. (2020). Dynamic relationship among economic growth, energy, trade openness, tourism, and environmental degradation: fresh global evidence. Environmental Science and Pollution Research, 27(12), 13477-13487.

Hanafiah, M. H. M., & Harun, M. F. M. (2010). Tourism demand in Malaysia: A cross-sectional pool time-series analysis. International Journal of Trade, Economics and Finance, 1(1), 80-83.

Hochreiter, S., & Schmidhuber, J. (1997). Long short-term memory. Neural Computation, 9(8), 1735-1780.

Jong, M. C. (2020). Empirical review on tourism demand and COVID-19. Munich Personal RePEc Archive.

Jong, M. C., Puah, C. H., & Arip, M. A. (2020). Modelling tourism demand: An augmented gravity model. Jurnal Ekonomi Malaysia, 54(2), 105-112.

Jong, M. C., Puah, C. H., & Soh, A. N. (2021). The impact of COVID-19 pandemic and commodities prices on Booking.com share price. Advances in Science, Technology and Engineering Systems Journal, 6(2), 185-189.

Kwack, S. Y. (1972). Effects of income and prices on travel spending abroad, 1960 III-1967 IV. International Economic Review, 13(2), 245-256.

Laber, G. (1969). Determinants of international travel between Canada and the United States. Geographical Analysis, 1(4), 329-336.

Li, Z., Zhang, X., Yang, K., Singer, R., & Cui, R. (2021). Urban and rural tourism under COVID-19 in China: Research on the recovery measures and tourism development. Tourism Review, 1-19.

Liew, V. K. S. (2020). The effect of novel coronavirus pandemic on tourism share prices. Journal of Tourism Futures, 1-16.

Lim, C. (1997). Review of international tourism demand models. Annals of Tourism Research, 24(4), 835-849. Martin, C. A., & Witt, S. F. (1988). Substitute prices in models of tourism demand. Annals of Tourism Research, 15, 255-268.

McCallum, J. (1995). National borders matter: Canada-U.S. regional trade patterns. The American Economic Review, 85(3), 615-623.

Polyzos, S., Samitas, A., & Spyridou, A. E. (2020). Tourism demand and the COVID-19 pandemic: An LSTM approach. Tourism Recreation Research, 1-13.

Preko, A., Mohammed, I., Gyepi-Garbrah, T. F., & Allaberganov, A. (2020). Islamic tourism: travel motivations, satisfaction and word of mouth, Ghana. Journal of Islamic Marketing, 12(1), 124-144.

Prideaux, B., Thompson, M., & Pabel, A. (2020). Lessons from COVID-19 can prepare global tourism for the economic transformation needed to combat climate change. Tourism Geographies, 22(3), 667-678.

Puah, C. H., Huan, S. H., & Thien, F. T. (2018a). Determinants of Chinese demand for tourism in Malaysia. Business and Economic Horizons, 14(3), 501-512.

Puah, C. H., Jong, M. C., Ayob, N., & Ismail, S. (2018b). The impact of tourism on the local economy in Malaysia. International Journal of Business and Management, 13(12), 151-157.

Puah, C. H., Thien, F. T., & Arip, M. A. (2014). Singaporean demand for tourism in Malaysia. Economic Annals-XXI, 11, 32-36.

Puah, C. H., Thien, F. T., Arip, M. A., & Chin, M. Y. (2019). Modelling a tourism demand in Vietnam. International Journal of Economics and Management, 13(2), 319-329.

Ranasinghe, R. (2021). After Corona (COVID-19) impacts on global poverty and recovery of tourism based service economies: An appraisal. International Journal of Tourism and Hospitality, 1(1), 52-64.

Rossello-Nadal, J. (2001). Forecasting turning points in international visitor arrivals in the Balearic Islands. Tourism Economics, 7(4), 365-380.

Shafiullah, M., Okafor, L. E., & Khalid, U. (2019). Determinants of international tourism demand: Evidence from Australian states and territories. Tourism Economics, 25(2), 274-296.

Shahbaz, M., Kumar, R. R., Ivanov, S., & Loganathan, N. (2017). The nexus between tourism demand and output per capita with the relative importance of trade openness and financial development: A study of Malaysia. Tourism Economics, 23(1), 168-186.

Sigala, M. (2020). Tourism and COVID-19: Impacts and implications for advancing and resetting industry and research. Journal of Business Research, 117, 312-321.

Soh, A. N., Puah, C. H., & Arip, M. A. (2019a). Construction of tourism cycle indicator: A signalling tool for tourism market dynamics. Electronic Journal of Applied Statistical Analysis, 12(2), 477-490.

Soh, A. N., Puah, C. H., & Arip, M. A. (2019c). Forecasting tourism demand with composite indicator approach for Fiji. Business and Economic Research, 12(2), 477-490.

Soh, A. N., Puah, C. H., & Arip, M. A. (2020). Tourism forecasting and tackling fluctuating patterns: A composite leading indicator approach. Studies in Business and Economics, 15(2), 192-204.

Soh, A. N., Puah, C. H., Arip, M. A., & Kuek, T. H. (2019b). Oil price and Fijian tourism cycle: A Markov regime-switching model. International Journal of Energy Economics and Policy, 9(6), 199-192.

Tang, C. F. (2018). The impacts of governance and institutions on inbound tourism demand: Evidence from a dynamic panel data study. Asia Pacific Journal of Tourism Research, 23(10), 1000-1007.

Tanjung, A., Thien, F. T., Puah, C. H., Brahmana, R. K., & Sianturi, R. (2017). Macroeconomic determinants of Indonesian tourism demand in Malaysia. Advanced Science Letter, 23(4), 3159-3162.

Thien, F. T., Puah, C. H., Hassan, M. K. H., & Arip, M. A. (2015). An ECM analysis of Thai tourism demand in Malaysia. Mediterranean Journal of Social Sciences, 6(3), 162-168.

UNWTO. (2021). International tourism highlights, 2020 edition. UNWTO, Madrid. Retrieved from https://doi.org/10.18111/9789284422456.

WTTC. (2021). Economic impact reports. Retrieved from https://wttc.org/Research/Economic-Impact

Xu, L., Wang, S., Li, J., Tang, L. & Shao, Y. (2020). Modelling international tourism flows to China: A panel data analysis with the gravity model. Tourism Economics, 25(7), 1047-1069.

Yap, S. A. Y. I., Ayob, N., & Puah, C. H. (2020). Event tourism demand and selected macroeconomic variables: An econometrics view of the long-run and short-run relationships. International Journal of Business and Society, 21(1), 183-196.