Modelling and forecasting the demand for and supply of hotel rooms in Hong Kong

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Modelling and forecasting the demand for and supply of hotel rooms in Hong Kong

 

Author: Jin, Jung-eun Esther
Title: Modelling and forecasting the demand for and supply of hotel rooms in Hong Kong
Degree: DHTM
Year: 2013
Subject: Hotels -- China -- Hong Kong
Hong Kong Polytechnic University -- Dissertations
Department: School of Hotel and Tourism Management
Pages: 195 leaves : ill. ; 30 cm.
Language: English
InnoPac Record: http://library.polyu.edu.hk/record=b2673111
URI: http://theses.lib.polyu.edu.hk/handle/200/7330
Abstract: This dissertation primarily investigates the determinants of the demand for and supply of hotel rooms at different categories (i.e., High Tariff A, High Tariff B and Medium Tariff) in Hong Kong, and estimates an econometric model to generate quarterly forecasts of such demand and supply. Six models of hotel demand and supply are introduced, and the time period for the analysis is from Quarter 1 2002 to Quarter 1 2012. Room nights sold (e.g., quantity demanded) and number of hotel rooms available (e.g., quantity supplied) are employed as dependent variables. This thesis also uses the bounds tests to determine the existence of a long-run cointegration relationship between hotel demand and supply and their determinants. Based on the presence of such a relationship, the long-run elasticities are estimated using the Auto-Regressive Distributed Lag (ARDL) model. According to the empirical results, income, relative price, and exchange rate are found to have the long-run cointegration relationships with hotel demand in all hotel categories, although the significance level of each variable to each tariff hotel differs. Conversely, the Hong Kong GDP, interest rate, Grade A office rent rate and employee salary show the long-run cointegration relationships with hotel supply in all hotel categories. Moreover, the results reveal that production costs, such as real estate price, interest rate and labour cost, are more important than price itself from the supplier perspective when making an investment decision. Potential opportunities for under-capacity for High Tariff A and Medium Tariff hotels are observed based on the long-run forecasts. For High Tariff B hotels, over-capacity situation is forecast. Comprehensive managerial suggestions are provided for the hotel practitioners and policymakers for resource allocation and planning based on the results from both the long-run elasticity estimates and the forecasts for both the demand for and supply of all hotel categories. The economic prosperity of China, governmental regulations and controls, and marketing are the most dominant sources of such opportunities for hotel demand in Hong Kong. Overall, the threats (under- and over-capacity) and opportunities (record-breaking tourist arrivals) have a number of similar sources, and these can grant both success and failure to the capacity management of Hong Kong hotels.

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