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What are the implications of geopolitical risks on travel and leisure firms?

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  • Sun, Kang
  • Chi, Jingnan
  • Tao, Miaomiao
  • Saadaoui, Jamel

Abstract

We investigate the impact of geopolitical risk (GPR) on global Travel & Leisure (T&L) stock returns using a Multivariate Quantile-on-Quantile Regression (MQQR) approach. Analyzing global, American, European, and Asian markets, we examine how GPR influences cross-market connectedness under different market conditions. Results reveal that the T&L sector exhibits a “fear-aspiration” dynamic, characterized by heightened vulnerability during market downturns and notable resilience during bullish conditions. American and European markets amplify global risk spillovers, whereas Asian markets act as relative buffers. Combining quantile-based vector autoregressions (QVAR) with OLS estimates, we demonstrate that GPR significantly dampens systematic return spillovers, particularly under extreme market conditions; instead, the underlying effects remain limited in normal states. These findings highlight the importance of integrating GPR measures into sector-specific stress-testing and early warning frameworks.

Suggested Citation

  • Sun, Kang & Chi, Jingnan & Tao, Miaomiao & Saadaoui, Jamel, 2026. "What are the implications of geopolitical risks on travel and leisure firms?," Finance Research Letters, Elsevier, vol. 91(C).
    • Handle: RePEc:eee:finlet:v:91:y:2026:i:c:s1544612325026686
    DOI: 10.1016/j.frl.2025.109419
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