The spillover effects of the COVID-19 pandemic: Which subsectors of tourism have been affected more?

This paper investigates the effects of COVID-19 pandemic-related uncertainty focusing on the US tourism subsectors, including airlines, hotels, restaurants, and travel companies. Using daily stock price data, we compute connectedness indices that quantify the financial distress in the tourism and hospitality industry and link these indices with a measure of COVID-19-induced uncertainty. Our empirical results show that some subsectors of tourism are affected more than others. The connectedness of tourism companies has severely increased after March 2020. Restaurants are the most heavily influenced subsectors of tourism, while airline companies come the next. Besides, our quantile regression suggests that higher quantile COVID-19 uncertainty index has more effect on the connectedness of tourism companies. Our results guide the policymakers and investors to detect the stress accumulated in each subsectors of tourism and to take more informed and timely decisions.