June 20, 2022

While the COVID-19 pandemic delivered a massive economic blow to the U.S. tourism sector, some rural communities benefited from the crisis in terms of employment gains, according to a team of researchers from the NERCRD and West Virginia University. Their study, which is the first to document COVID-19’s economic impact on tourism in the U.S. at the county level, may help guide the development of rural tourism and destination management strategies that enhance community resilience.

“As regional economists, we’re interested in how communities are affected by and recover from economic shocks, such as a natural disaster or recession. The COVID-19 pandemic was an entirely new kind of shock that is unique in many ways, including how it impacted the leisure and hospitality sector in different places,” said Luyi Han, the study’s lead author and a postdoctoral scholar at the NERCRD. “For example, while Americans avoided air travel and crowded destinations, they flocked to places with outdoor amenities and low population density or places that were distant from population centers. We wanted to better understand this variation over space, in terms of its economic impacts.”

The researchers focused on two key economic measures — employment and wages in the leisure and hospitality sector — and how these measures changed across counties in response to the pandemic. They found that while leisure and hospitality employment on average declined by 12% across all counties, it increased in 332 counties. They also found that where employment losses were the greatest, wages were more likely to increase, indicating that leisure and hospitality workers who managed to hold onto their jobs in hard-hit places received pay increases.

To conduct their study, which was published online June 16 in the journal Tourism Economics, the researchers used the Quarterly Census of Employment and Wages, which provides county-level data by industry and allowed them to focus on the leisure and hospitality sector specifically. They compared data on employment and wages from the third quarter of 2019 to the third quarter of 2020 to capture the peak travel months of July and August, said Han.

“We found that the pandemic had vastly different economic effects on tourism across the U.S., with some places experiencing tourism-related job losses as high as 71%, and other places experiencing more than a two-fold increase in these types of jobs,” said Han. “Typically, the places that experienced the biggest job gains had very low tourism employment to begin with, but our study revealed quite a bit of variation from place to place.”

To better understand this variation, the researchers conducted a statistical analysis to examine whether certain place-based factors might have played a role. They considered each county’s status on a continuum from urban to rural, distance from metropolitan areas, population density, average household income, the extent to which the local economy is diversified, and the community’s stock of “social capital,” a measure of the networks and bonds that foster cohesion among residents.

“Our main finding is that the tourism economy in rural counties weathered the shocks of the pandemic better than their urban counterparts. This is not all that surprising, given the risks COVID posed and the need for social distancing measures, which tourists might perceive as easier to accommodate through outdoor recreation and visiting lower population density rural communities,” said Jason Entsminger, assistant research professor of agricultural economics, sociology, and education at Penn State and associate director of the NERCRD. “What was really surprising was how much employment grew in some of the most rural and sparsely populated counties. Rises in employment and wages in these communities show the growth in tourism demand for rural spaces — suggesting people not only sought to avoid crowds but looked for far-flung and isolated places which they felt they could explore safely.”

Entsminger noted that this rise in demand presents both challenges and opportunities for rural community well-being, and that for some rural places, their new tourist-destination status and related employment gains weren’t necessarily all for the best.

“We know from previous research that tourism can be an effective strategy for rural communities to diversify and to enhance their resilience in the face of economic shocks. However, some communities might not be ready for the sudden influx of visitors, and can struggle over time with the effects. For example, there are early indications this influx is impacting the housing market, quality of life, and environmental quality in some areas,” Entsminger said. “Our findings show that the COVID-19 pandemic provides an opportunity for communities to consider their resilience as a tourist destination. Can they weather a sudden influx of tourists, as well as a sudden downturn? Policies that consider both perspectives are clearly needed in many rural places.”

In addition to Han and Entsminger, other members of the research team include Stephan Goetz, professor of agricultural and regional economics at Penn State and director of the NERCRD; Daniel Eades, extension specialist in rural economics at West Virginia University (WVU); and Doug Arbogast, extension specialist in rural tourism development at WVU. The research was supported in part by funding from the USDA National Institute of Food and Agriculture and the College of Agricultural Sciences at Penn State University.