Impact of financial/economic crisis on demand for hotel rooms in Hong Kong

Haiyan Song, Shanshan Lin, Stephen F. Witt, Xinyan Zhang

Research output: Journal article publicationJournal articleAcademic researchpeer-review

86 Citations (Scopus)

Abstract

The main objectives of this study are (1) to identify the factors that influence the demand for hotel rooms in Hong Kong and (2) to generate quarterly forecasts of that demand to assess the impact of the ongoing financial/economic crisis. The demand for four types of hotel room from the residents of nine major origin countries is considered, and forecasts are generated from the first quarter of 2009 to the fourth quarter of 2015. Econometric approaches are employed to calculate the demand elasticities and their corresponding confidence intervals, which are then used to generate interval demand predictions. The empirical results reveal that the most important factors in determining the demand for hotel rooms in Hong Kong are the economic conditions (measured by income level) in the origin markets, the price of the hotel rooms and the 'word of mouth' effect. Demand for High Tariff A and Medium Tariff hotel rooms is estimated to have experienced negative annual growth in 2009 due to the influence of the financial/economic crisis, whereas that for High Tariff B hotel rooms is thought to have grown in 2009 after having decreased in 2008. The demand for tourist guesthouse rooms is expected to be the least affected by the crisis. Overall demand is predicted to recover gradually from 2010 onwards.
Original languageEnglish
Pages (from-to)172-186
Number of pages15
JournalTourism Management
Volume32
Issue number1
DOIs
Publication statusPublished - 1 Feb 2011

Keywords

  • ADLM-ECM models
  • Confidence interval
  • Hotel demand forecasting
  • Long-run elasticity
  • Quarterly forecasts

ASJC Scopus subject areas

  • Development
  • Transportation
  • Tourism, Leisure and Hospitality Management
  • Strategy and Management

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