Research Note: A Study of the Business Cycle of the Hotel Industry in Taiwan

Ming-Hsiang Chen, Kun Lun Wu and Hung-Jen Su
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Ming-Hsiang Chen: Department of Finance, National Chung Cheng University, Chia-Yi, Taiwan, ROC
Kun Lun Wu: Department of Hotel and Restaurant Management, Chia Nan University of Pharmacy and Science, No 60, Sec 1 Erren Road, Rende District, Tainan City 71710, Taiwan, ROC
Hung-Jen Su: Department of Business Administration, National Chung Cheng University, Chia-Yi, Taiwan ROC

Tourism Economics, 2014, vol. 20, issue 3, 655-664

Abstract: This paper exploits a Markov regime-switching model to study the business cycle of the hotel industry (BCHI) in Taiwan from January 1999 to September 2011. The aggregate hotel room sales earnings are used to examine the business cycle of the Taiwanese hotel industry. The Markov regime-switching model detects two distinct regimes of the BCHI: a high-growth regime (HGR) and a low-growth regime (LGR). The average growth rate of HGR (LGR) is 4.12% (0.35%). The corresponding standard deviation in the two regimes is 5.60% and 0.30%, implying that LGR is more stable than HGR. The probability of the hotel industry staying in LGR (HGR) is 97% (66%) and the expected duration of HGR (LGR) is about 3 (39) months. Moreover, this study shows that the tourism market growth is significant in causing the hotel industry to stay in the HGR. The empirical findings provide useful information and policy implications for government tourism policymakers and tourist hotel managers.

Keywords: business cycle; hotel industry; room sales; Markov regime-switching model; Taiwan (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:toueco:v:20:y:2014:i:3:p:655-664

DOI: 10.5367/te.2013.0287

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