Economic decline and the birth of a tourist nation

Abstract

Price competitiveness is key for tourists' destination choice. In the study, we evaluate the effects of an economic decline caused by non-tourism industry on a tourist destination's price competitiveness. An econometric model of hotel revenue function is estimated in the study. Specifically, we estimate hotel revenue functions at the regional level in Norway to investigate how the crude oil price collapse and the subsequent economic decline influenced tourism demand in Norway. This type of cross-sectorial effect of non-tourism industries on tourism competitiveness has been little discussed in the tourism literature. The results show that the fall in crude oil price boosted tourism growth in Norway through a weakening of the local currency. This means tourism development is not always associated with economic growth, as discussed in most of the tourism literature. There might be some upper bounds of wealth in a nation where additional growth does not foster further tourism development due to the inflationary effects of economic growth. The study therefore adds new insights into the literature on tourism and economic growth.

The relationship between tourism and economic growth in the EU-28. Is there a tendency towards convergence?

“…Tourism positive contribution to growth is now certain and can be direct, indirect or induced. However, its effects on revenue are difficult to estimate (Lemma, 2014) and sometimes on economic growth (Xie & Tveterås, 2020).…”

20 years of Nordic tourism economics research: a review and future research agenda

“…SJHT has published a number of studies on tourism economics including tourism demand models for the Nordic countries (Aalen et al, 2019;Khalik Salman et al, 2010;Nordström, 2004;Xie & Tveterås, 2020a, 2020b These studies investigate the effects of economic factors such as income, relative prices, exchange rates and advertising on inbound tourism demand mainly for Norway and Sweden. The number of tourist arrivals is based on national statistics of hotel and other accommodation overnight stays.…”

“…In the current situation, the insights about tourism demand in the Nordic countries gained from research during the last decade are of limited applicability (see e.g. Aalen et al, 2019;Khalik Salman et al, 2010;Nordström, 2004;Xie & Tveterås, 2020a, 2020b. Since the pandemic has choked tourism demand due to travel restrictions, it means insights into the elasticities of tourism demand currently are of limited value.…”

20 years of Nordic hospitality research: a review and future research agenda

“…The hospitality industry has long-standing experience with managing stochastic demand (see e.g. Alemayehu & Tveteraas, 2020;Xie & Tveterås, 2020), "exploiting low entry barriers to work and precarious contracts" (Baum et al, , p. 2822. The likely consequences of the pandemic are that the disadvantages of hospitality work (i.e.…”