Effect of global uncertainty on international arrivals by purpose of visits and length of stay

Abstract

This paper investigates the effects of economic and political uncertainties on tourism demand using the 'World Uncertainty Index' (WUI). This index is more a sophisticated and reliable measure of global uncertainty than previous indices used by the literature. The findings show that uncertainty shocks affect travels for business, holidays, and visiting friends/relatives purposes negatively. It is statistically significant for duration of stay of 1 week to less than one month in Australia. This effect dissipates for longer stays. This study provides insightful information to destinations on how consumers adjust their behaviour during period of political and economic uncertainty.