The Impact of the Global Financial Crisis on the Entertainment Tourism Industry: A Financial Engineering Case Study of Macao from 2007 to 2010

Macao has long been a typical entertainment (especially, gaming) tourism city in the Asia-Pacific region. Sparked by the collapse of United States’ subprime mortgage securities in 2007, a global financial crisis swept through the global financial markets and economy in the several subsequent years. Macao's entertainment tourism industry was not spared. This paper attempts to construct a financial engineering model to link Macao's gross entertainment revenue with the key performance indicators of the global financial markets over these years. Results reveal that Macao's entertainment tourism industry closely correlated with the performance of the global financial markets, with the former lagging behind by two months in a specific manner. This model may provide Macao and other entertainment tourism cities with forecasts for strategic planning.