The European Tourism Industry in Crisis: A Stock Market Perspective

Abstract

This article aims to evaluate the market performance of the European tourism industry from 2004 to 2014, a period that includes the financial and economic crises, to highlight which macroeconomic factors influenced the industry stock returns. The Stoxx Europe 600 Travel & Leisure price index is used to proxy the industry stock performance, and a multifactor market model is employed to individuate which macroeconomic variables are able to drive tourism stock performance. Results highlight that tourism stock performance is influenced by market conditions and by uncertainty, measured through the Chicago Board Options Exchange Volatility index (VIX). Despite the importance of tourism in Europe and its contribution to the economic growth, there is scant evidence on the performance of this industry in this area and on its relationship with economic conditions. The article, to the best of knowledge, represents the first contribution on the performance of European tourism industry in crisis years with a macroeconomic perspective.