Tourism under the Early Phase of COVID-19 in Four APEC Economies: An Estimation with Special Focus on SARS Experiences

Authors: Bao-Linh Tran, Chi-Chung Chen ,Wei-Chun Tseng and Shu-Yi Liao

16 October 2020

This study examines how experience of severe acute respiratory syndrome (SARS) influences
the impact of coronavirus disease (COVID-19) on international tourism demand for four Asia-Pacific
Economic Cooperation (APEC) economies, Taiwan, Hong Kong, Thailand, and New Zealand, over the
1 January–30 April 2020 period. To proceed, panel regression models are first applied with a time-lag
effect to estimate the general effects of COVID-19 on daily tourist arrivals. In turn, the data set
is decomposed into two nation groups and fixed effects models are employed for addressing the
comparison of the pandemic-tourism relationship between economies with and without experiences
of the SARS epidemic. Specifically, Taiwan and Hong Kong are grouped as economies with SARS
experiences, while Thailand and New Zealand are grouped as countries without experiences of
SARS. The estimation result indicates that the number of confirmed COVID-19 cases has a significant
negative impact on tourism demand, in which a 1% COVID-19 case increase causes a 0.075% decline in
tourist arrivals, which is a decline of approximately 110 arrivals for every additional person infected
by the coronavirus. The negative impact of COVID-19 on tourist arrivals for Thailand and New
Zealand is found much stronger than for Taiwan and Hong Kong. In particular, the number of tourist
arrivals to Taiwan and Hong Kong decreased by 0.034% in response to a 1% increase in COVID-19
confirmed cases, while in Thailand and New Zealand, a 1% national confirmed cases increase caused
a 0.103% reduction in tourism demand. Moreover, the effect of the number of domestic cases on
international tourism is found lower than the effect caused by global COVID-19 mortality for the
economies with SARS experiences. In contrast, tourist arrivals are majorly affected by the number of
confirmed COVID-19 cases in Thailand and New Zealand. Finally, travel restriction in all cases is
found to be the most influencing factor for the number of tourist arrivals. Besides contributing to the
existing literature focusing on the knowledge regarding the nexus between tourism and COVID-19,
the paper’s findings also highlight the importance of risk perception and the need of transmission
prevention and control of the epidemic for the tourism sector.

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