The repercussions of COVID-19 on the stock market of the Tourism industry

Abstract

The COVID-19 pandemic has already caused important negative consequences on the tourism industry globally. The lockdown measures suspended the tourism activities, and many tourists preferred to abstain from these activities in fear of the virus infection. As a result, investors have abandoned tourism-related companies’ stocks, impacting, even more, the tourism industry. In this paper, we examine the biggest companies’ stocks related to tourism, from the fields of airlines, cruise lines, resorts, hotel groups, travel agents, and other tourism activities (such as car rentals). Using time series analysis, we test and analyze the effect of the COVID-19 pandemic on these stocks, and we derive the spillover effects through the impulse-response functions from each company to the others. Based on our findings, the tourism-related stocks were affected by COVID-19, as shown by the causality technique, and, moreover, the tourism-related companies are interconnected with each other, transmitting the shock from a specific tourism industry to the others, as shown by the impulse-response functions.