Mind the Gap: New Insights into the Dynamic Relationship between Tourism Flows and Tourism Expenditure in the UK

Abstract

There is an extensive literature on the tourism-growth relationship. Typically, this line of research uses either tourism flows or expenditure as comparable proxies for tourism demand. In this study we postulate that these two proxies should not be used interchangeably given that their relationship is not constant. Hence, we evaluate the time-varying relationship between tourism flows and expenditure, taking into consideration the potential feedback effect that could be explained within the Emotions, Motivation and Attitude (EMA) framework. Our results confirm the existence of the feedback effect, given that the said relationship is not only time-varying and volatile, but also sensitive to economic and political crises. As a consequence, we maintain that the tourism-growth nexus is far more complex than envisaged in the prior literature, thus highlighting the need for future research. Relevant policy implications are also discussed.

Keywords: Tourism-growth nexus, Tourism flows, Tourism expenditure, Feedback effect, EMA model, Crisis