The effect of economic policy uncertainty on hotel room demand-evidence from Mainland Chinese and Japanese tourists in Taiwan

Chen, Chiang-Ming; Hua, Kuo-Ting; Chyou, Jiin-Tian; Tai, Chih-Chung

doi:10.1080/13683500.2018.1556621

Cited by 26 publications

(24 citation statements)

References 21 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…While the impact is consistent across the lags of the EPU index from one to six months, the most prominent negative effect is realized when the EPU is lagged six-months. This finding is consistent with that of Madanoglu and Ozdemir (2019) and Chen et al (2020), who also reported a decline in room demand as the level of policy-related economic uncertainty increases. Likewise, the decline in room demand under high EPU is closely related to the drop in overall tourism expenditures, as reported in Gozgor and Ongan (2017).…”

Section: Discussionsupporting

confidence: 89%

“…This study also has theoretical implications for future research. The results of this study support the notion that policy-related economic uncertainty hurts tourism expenditure and hotel performance at the property level, providing support to limited prior studies (Bronner and De Hoog, 2012; Madanoglu and Ozdemir, 2019; Chen et al , 2020). In doing so, the study employs random-effects regression and SEM for mediation analysis, thereby provides methodological richness to this emerging literature.…”

Section: Conclusion Discussion Limitations and Future Researchsupporting

confidence: 81%

“…That is, consumer sentiment acts as a mediator to explain the reported relationship between EPU and hotel occupancy. In that regard, the study responds to the call of prior research to explore the underlying reasoning behind the link between EPU and hotel performance (Chen et al , 2020) and extends the literature by not only presenting the nature of the relationship but also revealing a considerable cause of the relationship. The role of consumer sentiment in the relationship between EPU and hotel occupancy is consistent with Keynes' argument of “animal spirits” and empirical findings of Sims et al (2012) and Svensson et al (2017) that report cuts on consumer spending when uncertainty rises in an economy.…”

Section: Conclusion Discussion Limitations and Future Researchmentioning

confidence: 75%

“…In one of the rare studies, Ghosh (2019) suggested that economic and political uncertainty adversely affected inbound tourists' expenditure in the United Kingdom, France, and Greece. Likewise, Chen et al (2020) studied the Taiwanese hotel market and reported a significant decline in room demand from Chinese and Japanese markets when policy uncertainty was high. From a macroeconomic perspective, Gozgor and Ongan (2017) linked the EPU to tourism expenditure in the United States, and reported a decline in tourism expenditures when the level of EPU increased.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

See 3 more Smart Citations

Economic policy uncertainty and hotel occupancy: the mediating effect of consumer sentiment

Özdemir

Han

Dalbor

2021

JHTI

View full text Add to dashboard Cite

PurposeThe purpose of this paper is twofold. First, the study examines the prolonged effect of policy-related economic uncertainty on hotel operating performance, particularly the room demand (occupancy). Second, the study attempts to explain why occupancy drops when the perceived economic uncertainty is high by studying the mediating effect of consumer sentiment in the relationship between economic policy uncertainty and hotel demand.Design/methodology/approachThis quantitative study uses secondary data – US economic policy uncertainty (EPU) index, University of Michigan's index of consumer sentiment (ICS), and property-level hotel operating data from three states of the US – California, Florida and New York. Data were analyzed using random effect regression and structural equation modeling. Robustness tests were conducted to enhance the reliability of the research findings.FindingsRandom-effects regression analysis reveals that policy-related economic uncertainty has a negative and lead-lag effect on hotel occupancy, average daily rate and revenue per available room (RevPAR). Structural equation modeling results show that the relationship between economic policy uncertainty and hotel occupancy is significantly mediated by consumer sentiment. Robustness test results support the findings from the main analysis.Practical implicationsThis study offers valuable implications for the hotel professionals in regard to anticipating the economic impact of policy-related uncertainty on hotel industry and understanding how consumer sentiment affects demand at such crises times. Moreover, the study suggests potential course of actions to deal with declining room demand at times of uncertainty.Originality/valueThis empirical study explores how economic policy uncertainty affects hotel performance at the property level and explains the mediating effect of consumer sentiment on hotel room demand. The study provides a first-hand evidence of how consumer sentiment relates to the perception of economic uncertainty and leads to decline in consumer demand. In that regard, findings of the study have valuable implications for hospitality industry practitioners and relevant policymakers.

show abstract

Section: Discussionsupporting

confidence: 89%

Section: Conclusion Discussion Limitations and Future Researchsupporting

confidence: 81%

Section: Conclusion Discussion Limitations and Future Researchmentioning

confidence: 75%

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

See 2 more Smart Citations

Economic policy uncertainty and hotel occupancy: the mediating effect of consumer sentiment

Özdemir

Han

Dalbor

2021

JHTI

View full text Add to dashboard Cite

show abstract

“…Likewise, the negative effect of EPU is documented in Ongan and Gozgor (2018) for Japanese tourists traveling to the United States. Chen et al (2020) consider the effect of EPU on tourist arrivals from Mainland China and Japan to Taiwan in trough and peak periods. EPU is therefore found to decrease demand among Mainland Chinese and Japanese tourists in trough periods; however, this negative effect turns insignificant in peak periods.…”

Section: Literature Reviewmentioning

confidence: 99%

Understanding the effects of economic policy uncertainty on US tourism firms’ performance

et al. 2021

View full text Add to dashboard Cite

This study analyzes the impact of economic policy uncertainty (EPU) on the performance of US tourism firms using a sample of 296 publicly traded tourism companies from 2000 to 2018 with a sample of 3068 firm-year observations. Estimation results of panel regressio tests based on the system-generalized method of moments indicate that EPU has a negative impact on return on assets (ROA), return on equity (ROE), and Tobin’s Q. Our results are consistent for different variable specifications. We also find that firm size and leverage play a moderating role in the relationship between EPU and firm performance. Panel quantile regression results show that the impact of EPU on US tourism firm performance is asymmetric. Specifically, low-performing (25% quantile of ROA and ROE) firms are less affected by EPU, and for the case of Tobin’s Q, EPU does not affect firms with a high growth opportunity (100% quantile of Tobin’s Q).

show abstract

Effect of global uncertainty on international arrivals by purpose of visits and length of stay

Gözgör

Seetaram

Lau

2021

Journal of Tourism Research

View full text Add to dashboard Cite

This paper investigates the effects of economic and political uncertainties on tourism demand using the 'World Uncertainty Index' (WUI). This index is more a sophisticated and reliable measure of global uncertainty than previous indices used by the literature. The findings show that uncertainty shocks affect travels for business, holidays, and visiting friends/relatives purposes negatively. It is statistically significant for duration of stay of 1 week to less than one month in Australia. This effect dissipates for longer stays. This study provides insightful information to destinations on how consumers adjust their behaviour during period of political and economic uncertainty.

show abstract

The effect of economic policy uncertainty on hotel room demand-evidence from Mainland Chinese and Japanese tourists in Taiwan

Cited by 26 publications

References 21 publications

Economic policy uncertainty and hotel occupancy: the mediating effect of consumer sentiment

Economic policy uncertainty and hotel occupancy: the mediating effect of consumer sentiment

Understanding the effects of economic policy uncertainty on US tourism firms’ performance

Effect of global uncertainty on international arrivals by purpose of visits and length of stay

Contact Info

Product

Resources

About