Economic losses in tourism during the COVID-19 pandemic. The case of Sorrento

ABSTRACT

The tourism sector is facing its most severe crisis under the COVID-19 pandemic. Social distancing measures, global travel restrictions, stay-at-home orders, and other lockdown measures brought tourism to a halt in 2020. We estimate the potential economic losses thereof in terms of added value and number of tourists by nationality. By using the city of Sorrento as prominent and representative case study, we implement time-series analysis with autoregressive-integrated moving average models on monthly data from January 2013 to December 2019. We thus forecast the loss of tourists and added value in 2020. The results reveal that the pandemic has significantly affected the tourism sector, the added value of tourism in Sorrento might decrease by over 70%, and tourist arrivals might similarly fall or even reach zero foreign arrivals. The local government should reassess the sustainability of tourism proposals by factoring in the lack of tourist arrivals and focusing on loyal tourists and proximity tourists, two fundamental target audiences.

Highlights

• We analyse the potential economic effect of COVID-19 on tourism in 2020

• A forecast analysis estimates the changes in added value and number of tourists

• An ARIMA model is employed on monthly data

• COVID-19 might negatively and severely affect the tourism economy

• Foreign tourism risks attracting zero travellers in the post-pandemic period

KEYWORDS:

• ARIMA models
• COVID-19
• forecasts
• Italy

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 http://dati.istat.it/

2 http://www.ilmegliodisorrento.com/banco-di-napoli-e-turismo-sorrentino/ (accessed on 12 June 2021).

3 http://www.ilmegliodisorrento.com/banco-di-napoli-e-turismo-sorrentino and http://www.ilmegliodisorrento.com/banco-di-napoli-e-turismo-sorrentino/ (last accessed on 28 December 2020).

4 http://www.ilmegliodisorrento.com/banco-di-napoli-e-turismo-sorrentino/ (last accessed on 28 December 2020).

5 The COVID-19 pandemic that spread globally in 2020 forced governments across the world to enforce lockdowns, an emergency protocol that prevented people from entering or leaving a particular place for their safety. This policy adversely affected all sectors of production, and particularly that of tourism, by completely resetting the economic effects.

6 For each variable, we estimated different ARIMA models, with different lags of the seasonal and non-seasonal terms. For reasons of space, we have only reported the most important results. Interested readers can make a request to the authors for the complete data.

7 More details here: https://www.avvenire.it/economia/pagine/indagine-coronavirus-e-impatto-con-le-aziende-italiane

8 Due to the lack of data on the impact of COVID-19 on tourism in Sorrento, we present the Italian scenario. The official data on employment in the Italian tourism sector highlights a drop in accommodation employment of −46.4% (March 2020–March 2021), and −77.4% in hiring firms between April 2019 and April 2021 (Federalberghi, 2021).

9 More details here: https://www.positanonews.it/2021/02/positano-sorrento-operatori-turistici-prenotazioni-cancellate-per-la-primavera/3470065/ and https://www.positanonews.it/2021/02/turismo-e-covid-sorrento-disegna-il-piano-salvezza/3468265/

10 Invitalia is the National Development Agency, owned by the Ministry of Economy. More details on this plan can be found here: https://www.ilsole24ore.com/art/partite-ristrutturazioni-dodici-grandi-alberghi-ADgv2iLB