THE IMPACT OF CONSUMER CONFIDENCE INDEX ON THE TOURISM MARKET: A COMPARATIVE STUDY OF CONSUMER BEHAVIOUR DURING ECONOMIC RECESSION AND ECONOMIC PROSPERITY

Abstract

This research focuses on the effect of CCI on the tourism market within the UK in conditions of economic recession and growth. Taking a comparative analysis approach through regression and Difference-in-Differences (DID) method, it looks at consumer behaviour and tourism expenditure during the 2008 financial crisis, the COVID-19 pandemic, and the pre-pandemic time of 2015 to 2019. Thus, the impact of consumer confidence on the volume of tourism demand, the frequency of trips and expenditure is illustrated. During recessions, consumers are less confident and spend less on travel, travel domestically, and take shorter trips. On the other hand, favourable periods are marked by factors such as global travel, tourism, vacationing and views even for luxury given that consumers are richer. The study also looks at how current and future trends of tourism market consumer behaviour and the overall economic climate can be managed to allow current and future tourism-related businesses to endure past such a shift. It explains that during downturns businesses can, for instance, jump onto promoting domestic tourism; while in periods of growth tourism businesses can, for instance, shift to focusing on luxury tourism. These results also support CCI as the most effective predictor of tourism behaviour and imply that other sectors, including businesses in the travel industry and governmental agencies, should integrate information on consumer sentiment data to predict market tendencies and develop corresponding strategies. Thus, this research contributes to the knowledge of how tourism markets should be managed about economic cycles and various volatilities.