nep-tur New Economics Papers
on Tourism Economics
Issue of 2021‒05‒31
two papers chosen by
Laura Vici
Università di Bologna

  1. The effect of novel coronavirus pandemic on tourism share prices By Liew, Venus Khim-Sen
  2. Abnormal returns on tourism shares in the Chinese stock exchanges amid COVID-19 pandemic By Liew, Venus Khim-Sen

  1. By: Liew, Venus Khim-Sen
    Abstract: This paper aims to provide swift feedback to readers and investors on the early effect of novel coronavirus (COVID-19) pandemic outbreak on tourism industry. Three leading consolidators of hotel accommodations, airline tickets and travel services in the tourism industry around the globe, namely Booking Holdings Inc., Expedia Group and Group Ltd. are chosen in this study. First, numerical description is performed on their shares prices and a set of control variables, to compare their performances before and during the lockdown due to COVID-19 outbreak. Next, this paper estimates OLS models with and without General AutoRegressive Conditional Heteroscedasticity (EGARCH) specification to establish the nature, significance and magnitude of the pandemic early effect on the shares performance of these online travel companies. This paper discovers a rapid decline in the performance of tourism industry amid the pandemic outbreak, from the perspective of three leading online travel companies, which derive their profits from tourists by providing them online hotel reservation, air-ticketing and packaged-tour business services around the globe. This significant adverse direct and indirect effects testify that tourism related businesses are extensively locked down by the pandemic outbreak. Future studies are encouraged to examine each of the tourism sectors for individual effects. This paper provides implications for investors to protect their wealth, and for policy makers to ensure sustainability of tourism industry in the pandemic outbreak and in the future. From the perspective of corporate finance, this paper empirically quantifies the early effect of COVID-19 on tourism industry for a quick snapshot.
    Keywords: coronavirus pandemic, COVID-19,tourism, share prices
    JEL: G15
    Date: 2020
  2. By: Liew, Venus Khim-Sen
    Abstract: This study finds significant immediate adverse impact of the novel coronavirus (COVID-19) pandemic on tourism shares listed in the Shanghai and Shenzhen stock exchanges, in terms of breadth and depth. Overall, prices of these shares plunged by 20% in three consecutive days in response to pandemic fears, before technical rebound set in. Significant negative cumulative abnormal returns after the Wuhan lockdown are identified in 18 out of 21 tourism shares traded in the Chinese stock exchanges. These findings could serve as references for the China Security Regulatory Commission to monitor the market in future pandemic management. Investors are advised to avoid tourism shares the moment there is any suspicious development of virus outbreak in the future. Instead, they could look for opportunity to buy dip after massive market decline at the appropriate timing.
    Keywords: Tourism; coronavirus pandemic; COVID-19; Chinese stock exchanges; event study; abnormal returns.
    JEL: G10 G14 G15
    Date: 2020

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