Heterogeneity of inbound tourism driven by exchange rate fluctuations: implications for tourism business recovery and resilience in Australia

ABSTRACT

Quantifying risk spillovers from exchange rates to inbound tourist arrivals by purpose of visit is essential for Australia to take proactive measures to achieve tourism business recovery and resilience after such critical events like the recent bushfires and the COVID-19 pandemic. Using a monthly dataset over the period January 1998–March 2020, this paper calculates the conditional value-at-risk (CoVaR) to evaluate how different types of inbound tourists to Australia respond to exchange rate fluctuations. The empirical results identify inbound tourist arrivals with the highest sensitivity to exchange rate fluctuations, confirming the role of exchange rates in determining inbound tourist arrivals by purpose of visit. Furthermore, these results shed light on provisions of tourism products, services, and infrastructural facilities to satisfy different requirements of Australia’s inbound tourists by purpose of visit, aiming to promote tourism business recovery and resilience in Australia.

KEYWORDS:

• Tourism business recovery
• tourism resilience
• exchange rate fluctuations
• inbound tourist arrivals by purpose of visit
• GARCH-DCC model
• conditional value-at-risk

Disclosure statement

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

Notes

1 https://www.abs.gov.au/ausstats/[email protected]/Latestproducts/3401.0Main%20Features13Jun%202020?opendocument&tabname=Summary&prodno=3401.0&issue=Jun%202020&num=&view = 

2 https://www.abs.gov.au/ausstats/[email protected]/Latestproducts/3401.0Main%20Features13Jun%202020?opendocument&tabname=Summary&prodno=3401.0&issue=Jun%202020&num=&view = 

3 Wind Information Co., Ltd (http://www.wind.com.cn/en/), headquartered in the Lujiazui Financial Center in Shanghai, is a leading integrated service provider of financial data, information, and software.

Additional information

Funding

This work was supported by National Natural Science Foundation of China through grant number 71971133 (Yuting Gong). This research was supported by National Natural Science Foundation of China through grant number 71904117 (Likun Wang).