Economic impacts of COVID-19 on inbound and domestic tourism

Abstract

COVID-19 has led to an unprecedented disruption in tourism spending. This has propagated through the whole economy, however the scale of these system-wide consequences can be hard to quantify. We calculate direct reductions in spending across domestic and inbound tourism categories and then use a computable general equilibrium model to quantify their economic impacts. The results – illustrated using a model for Scotland and focusing on 2021 - demonstrate the scale of the losses in the tourism industry and the economy as a whole that are attributable to changes in both domestic and inbound tourism demand. We find that the extent to which domestic tourism demand can mitigate the losses in inbound spending depends on the composition of demand.