The effect of novel coronavirus pandemic on tourism share prices

This paper aims to provide swift feedback to readers and investors on the early effect of novel coronavirus (COVID-19) pandemic outbreak on tourism industry. Three leading consolidators of hotel accommodations, airline tickets and travel services in the tourism industry around the globe, namely Booking Holdings Inc., Expedia Group and Trip.com Group Ltd. are chosen in this study. First, numerical description is performed on their shares prices and a set of control variables, to compare their performances before and during the lockdown due to COVID-19 outbreak. Next, this paper estimates OLS models with and without General AutoRegressive Conditional Heteroscedasticity (EGARCH) specification to establish the nature, significance and magnitude of the pandemic early effect on the shares performance of these online travel companies. This paper discovers a rapid decline in the performance of tourism industry amid the pandemic outbreak, from the perspective of three leading online travel companies, which derive their profits from tourists by providing them online hotel reservation, air-ticketing and packaged-tour business services around the globe. This significant adverse direct and indirect effects testify that tourism related businesses are extensively locked down by the pandemic outbreak. Future studies are encouraged to examine each of the tourism sectors for individual effects. This paper provides implications for investors to protect their wealth, and for policy makers to ensure sustainability of tourism industry in the pandemic outbreak and in the future. From the perspective of corporate finance, this paper empirically quantifies the early effect of COVID-19 on tourism industry for a quick snapshot