Diversion of Tourism Flows in the Asia & Pacific Region: Lessons for COVID-19 Recovery

IMF Working Papers, August 20, 2021

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The COVID-19 pandemic prompted a collapse in international tourism, severely impacting the tourism-dependent economies in the Asia & Pacific region.
Once countries start reopening, tourism diversion effects could accelerate the recovery in countries that establish themselves as more attractive travel destinations than competitors.
The paper investigates the impact of previous shocks in tourism competitor countries on visitor inflows, with a particular focus on tourism-dependent Pacific Island Countries (PICs).
Key empirical finding: the share of departures from Australia to PICs increased by 12 percent during the SARS outbreak.
The authors derive policy implications for the post-COVID-19 revival of inbound tourism to PICs and lessons for the future.

PICs were generally resilient to external shocks and benefitted from diversion effects for certain types of shocks.
Empirical example:
- Share of departures from Australia to PICs increased by 12 percent during the SARS outbreak.

Derive policy implications for the post-COVID-19 revival of inbound tourism to PICs (specific recommendations are presented in the working paper).
Lessons for the future emphasize positioning countries as more attractive travel destinations relative to competitors to capture diversion effects as travel reopens.

Subject: Communicable diseases, COVID-19, Economic sectors, Health, Tourism
Keywords: Asia and Pacific, Communicable diseases, COVID-19, Global, Pacific Islands, Tourism, tourism determinant, tourism development, tourism diversion effect, tourism recovery, tourism revenue, tourism sector