Airline Disasters and the Performance of Tourism and Hospitality Stocks

Prior research examines the link between the airline industry and the tourism industry and shows that the robustness of tourism is heavily dependent upon air transport. To further document the strength of this link, this study examines the impact of major airline disasters on the stock prices of U.S. tourism and hospitality firms. Results show that, relative to the rest of the market, the stock prices of tourism and hospitality firms markedly decrease following major airline crashes. The negative stock-price reaction is the most pronounced when examining the September 11, 2001 (9/11) terrorist attacks. However, when excluding this particular event, results continue to show that the stock returns for tourism and hospitality firms are significantly negative surrounding other large-scale airline disasters. Consistent with the existing literature that highlights the association between air transport and the tourism industry, the conclusions from this study seem to indicate that the value of tourism and hospitality firms is particularly sensitive to airline disasters.