Malaysian Tourism Industry in the Climate Change Context: Economic Risk and Return


Lee, See Nie and Tan, Chuie Hong and Thai, Siew Bee (2022) Malaysian Tourism Industry in the Climate Change Context: Economic Risk and Return. In: Postgraduate Social Science Colloquium 2022, 1 - 2 June 2022, Online.

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Background - In the past few decades, the tourism industry has experienced significant development and it is one of the main contributors in world economy. In Malaysia, tourism sector is the third greatest contributor of gross domestic production, right after manufacturing and agriculture sector. The number of international tourists’ arrivals in the world has risen from only 166 million in year 1970 to 1.5 billion in year 2019. However, tourism industry is not immune to observed and possible impacts on future climate change. The link between climate change and tourism sector is expected to be negatively significant. Climate change has unlocked the discussion on the whether the tourism industry can sustain and endure the climate challenges. There are still lack of studies on the impact of tourism on economic growth and risk under environmental hazards, particularly in Malaysia. Purpose - This study aims to understand the effect of environmental hazards on the international tourist arrivals in Malaysia. Although it is a widely accepted fact that tourism demand can lead to economic growth, empirical studies of tourism firm financial performance on economic risk and return nexus has been quite scant, especially under climate change condition. This study also examines different types of environmental hazards impact on tourism firm financial performance. Tourism firm performance which leads to the stabilizing effect on stock return volatility and increase economic growth is also analyzed under climate change condition. Tourism is a climate-dependent industry, and many tourism industry players owe their popularity destinations to their pleasant climates during holiday seasons. This study also explores the knowledge of the Malaysian hoteliers and travel agencies on the impact of climate change risks. The purpose of the study is to gain an understanding of the perceptions and preparedness of hoteliers and travel agencies in resilience to climate change challenges. Design/methodology/approach - This study uses panel and time series data in Malaysia from years 2010 until 2021. Data are content-analyzed and coded into weather types, firm performance, stock return volatility and impacts. Environmental hazards include CO2 emissions, AQI and GHG, however climate change may include temperature, humidity, sea level pressure, wind speed, storm, rain fall as well as extreme events. Climate change data is collected from National Climatic Data Center (NCDC) of National and Oceanographic and Atmospheric Administration (NOAA). Capital formation data, international tourist arrivals, and the number of employees is gathered from CEIC DATA, Department of Statistics. In order to linearize the model, all of the panel and time series data will be transformed into natural logarithms. A weather station captures the climate change trend in the main areas of Peninsular Malaysia and Borneo, Malaysia. In every major region of Malaysia, at least one station with comprehensive climate data is selected. Part of the weather stations are located in the cities Kota Kinabalu and Kuching to capture climate change in Sabah and Sarawak respectively. In Peninsular Malaysia, the selected sites are Malacca on the west coast, Kuantan on the east coast and Subang in the Federal Territory of Kuala Lumpur. The volatility of firm stock returns is generated via the GARCH, E-GARCH, and standard deviation models. For firm financial performance measurement, Tobin’s Q, Return on Equity (ROE) and QoQ are employed. Malaysian economic development is measured by Gross Domestic Productivity (GDP). Monthly data is analyzed using the linear regression approach to examine the impact of environment hazards on tourism firm performance and the effect of firm performance on economic risk and return. Granger Causality Test is employed to test the directional cause analysis among variables. Besides that, a questionnaire survey is designed to measure the perceptions and knowledge on climate change from the tourism industry players. A mixed of close- and open-ended questionnaire survey are directed to managers in the hotel industry and travel agencies in Malaysia. The targeted area includes Melaka, Port Dickson and Seremban town. Findings/Expected Contributions - In progress Research limitations - NIL Originality/value - NIL

Item Type: Conference or Workshop Item (Paper)
Uncontrolled Keywords: tourism industry, environmental hazards, climate change, economic growth, stock return volatility
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD9000-9999 Special industries and trades
Divisions: Faculty of Management (FOM)
Depositing User: Ms Suzilawati Abu Samah
Date Deposited: 15 Aug 2022 00:34
Last Modified: 19 Aug 2022 08:03


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