Interconnectedness of international tourism demand in Europe: A cross-quantilogram network approach

We study the interconnectedness of international tourism demand changes among 30 European countries. Using cross-quantilogram analysis, we estimate the strength of the directional (lead/lag) relationships of the international tourism demand of European countries in percentiles (10th, 50th, 90th). The complex interconnectedness of international tourism demand is studied within networks, where a fixed number of vertices represent countries, and oriented edges represent the presence of a directional relationship between the international tourism demand of two countries. A comparison of these networks reveals the following regularities. First, we find obvious asymmetry across percentiles, where demand behaves much more similarly during times of crisis (10th percentile) compared to tranquil periods (50th percentile). The interconnectedness of these networks almost diminishes when the international demand for tourism increases sharply (90th percentile). Second, we observe that the interconnectedness does not change much among the short- (within 3 months), mid- (up to 6 months) and long-term (up to 9 months) lead/lag relationships, which leads us to conclude that much of the interconnectedness of international tourism demand is driven by dependence during the first three months. On the basis of these findings, we review the possible forces that may drive the formation of the resulting complex structures using exponential random graph models. Our third finding is that there is a tendency for the relationships of the international tourism demand among the various countries to be bidirectional. Finally, our fourth new finding is that the interconnectedness of markets during sharp declines in tourism demand tends to increase for Central and Eastern European (CEE) countries, and those that are less developed in terms of their relative sector size to the size of the economy.