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

Author

Listed:
  • 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)

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.

Suggested Citation

  • Ming-Hsiang Chen & Kun Lun Wu & Hung-Jen Su, 2014. "Research Note: A Study of the Business Cycle of the Hotel Industry in Taiwan," Tourism Economics, , vol. 20(3), pages 655-664, June.
    • Handle: RePEc:sae:toueco:v:20:y:2014:i:3:p:655-664
    DOI: 10.5367/te.2013.0287
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    References listed on IDEAS

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    1. Tomás F. Espino-Rodríguez & Pei Chun Lai & Tom Baum, 2012. "Risks and Benefits of Outsourcing Hotel Operations: A Comparison between Scotland and Taiwan," Tourism Economics, , vol. 18(1), pages 95-120, February.
    2. Chen, Ming-Hsiang, 2010. "The economy, tourism growth and corporate performance in the Taiwanese hotel industry," Tourism Management, Elsevier, vol. 31(5), pages 665-675.
    3. Hamilton, James D, 1989. "A New Approach to the Economic Analysis of Nonstationary Time Series and the Business Cycle," Econometrica, Econometric Society, vol. 57(2), pages 357-384, March.
    4. Chia-Yu Yeh & Chiang-Ming Chen & Jin-Li Hu, 2012. "Business Diversification in the Hotel Industry: A Comparative Advantage Analysis," Tourism Economics, , vol. 18(5), pages 941-952, October.
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    Cited by:

    1. Xiang Lin & Martin Thomas Falk, 2022. "Nordic stock market performance of the travel and leisure industry during the first wave of Covid-19 pandemic," Tourism Economics, , vol. 28(5), pages 1240-1257, August.
    2. Hsu, Pao-Peng, 2017. "Examination of Taiwan's travel and tourism market cycle through a two-period Markov regime-switching model," Tourism Management, Elsevier, vol. 63(C), pages 201-208.

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