Research on the dynamic impact of external uncertain factors on tourism

ABSTRACT

In recent years, a variety of uncertain factors have occurred frequently, such as international financial crisis, geographic conflicts, Sino-US trade disputes, and COVID-19, which have brought obvious unconventional fluctuations to China's tourism industry. By combing the uncertain events, this paper divides the uncertain factors into three categories. The first is Economic Policy Uncertainty (EPU), which refers to the uncertainty of future tourism development and unpredictable effects of tourism policy. The second is geopolitical risk (GPR), which refers to the risks related to armed conflicts or tensions between countries, which are more exogenous than economic and have a huge impact on inbound and outbound tourism. The third is financial stress (FS), which is concentrated to reflect the uncertainty of changes in the financial system to market, which is more likely to cause uncertain effects on the financial aspects of tourism companies' such as investment and cash flow. A comprehensive discussion of these three types of external uncertainties' impact mechanisms on tourism would help tourism companies to prevent and deal with risk events, and is significant for promoting the upgrade of supply-side transformation of the tourism industry. Based on the existing research, the documents provide good academic value about the impacts of uncertain factors on tourism, but only qualitatively or statically. Therefore, there is still a lack of dynamic research. To this end, We introduces a time-varying parameter vector autoregressive model (TVP-SVAR-SV), which extends the constant parameters of the classic SVAR to the stochastic volatility parameters. This model could capture the time-varying changes of variables caused by external shocks, including gradual changes or potential structural mutations, without the need to split the time series into sub-sequences, that makes it possible to study the characteristics of heteroscedasticity, clustering, asymmetry, and periodic effects of tourism variables. Therefore, based on the advantages of the TVP-SVAR-SV, we studies the impact of EPU, GPR and FS on tourism companies in different intervals or at specific points in time, which will help tourism companies better deal with challenges, seize opportunities, and maintain sustainable development.In summary, this paper exploits the financial data of tourism companies to analyze the dynamic impact of three uncertain factors, EPU, GPR, and FS on China's tourism companies. The results show that the economic policy uncertainty has the greatest impact on the scenic enterprises, especially the uncertainty brought by the SARS epidemic, which has a long-term significant negative effect;The geographical risk will have an obvious downward impact on the travel agency enterprises, which tends to increase in the near future, but has a certain positive impact on the scenic and hotel enterprises;The aggravation of financial pressure will bring strong adverse effects to scenic spots and travel agency enterprises, while the alleviation of financial pressure has a positive effect on the development of the two types of enterprises;After the outbreak of highly uncertain events, tourism enterprises will show obvious time-varying lag response, usually more than one year. The conclusion of this study is helpful to improve the understanding of the uncertain factors in the tourism industry, and also provides policy implications for how to deal with the complex and changeable external environment.