Skip to main content

How do Overnight Stays React to Exchange Rate Changes?

Summary

This paper analyses the effect of a change in the real exchange rate on the number of overnight stays in Swiss hotels. It uses unique three-dimensional panel data on the monthly number of overnight stays by the visitor’s country of origin in 141 Swiss communities during the ten-year period from January 2005 to December 2014. We find low exchange rate elasticities of 0.2 for cities, but much higher elasticities of 1.4 for touristic communities. On the source market side, we find large exchange rate elasticities for German, Dutch, and Belgian visitors, while travellers from France and Italy are less price sensitive.

References

  • Abrahamsen, Yngve, and Banu Simmons-Süer (2011), “Die Wechselkursabhängigkeit der Schweizer Wirtschaft“, KOF Studien, no. 24.

    Google Scholar 

  • Allision, Paul D., and Richard P. Waterman (2002), “Fixed-Effects Negative Binomial Regression Models”, Sociological Methodology, 32(1), pp. 247–265.

    Article  Google Scholar 

  • Athanasopoulos, George, Minfeng Deng, Gang Li, and Haiyan Song (2014), “Modelling Substitution between Domestic and Outbound Tourism in Australia: A System-of-Equations Approach”, Tourism Management, 45, pp. 159–170.

    Article  Google Scholar 

  • Baldwin, Richard E., and Virginia Di Nino (2006), “Euros and Zeros: The Common Currency Effect on Trade in New Goods”, NBER Working Papers, no.12673.

    Google Scholar 

  • Berman, Nicolas, Thierry Mayer, and Philippe Martin (2012), “How do Different Exporters React to Exchange Rate Changes?”, The Quarterly Journal of Economics, 127(1), pp. 437–492.

    Article  Google Scholar 

  • Chevillon, Guillaume, and Xavier Timbeau (2006), «L’impact du taux de change sur le tourisme en France», Revue de l’ofce, 98, pp. 167–181.

    Google Scholar 

  • Corgel, Jack, Jamie Lane, and Aaron Walls (2013), “How Currency Exchange Rates Affect the Demand for U.S. Hotel Rooms”, International Journal of Hospitality Management, 35, pp. 78–88.

    Article  Google Scholar 

  • Correia, Sergio (2014), “Least Squares Iteration with Several High-Dimensional Fixed Effects”, Mimeo.

    Google Scholar 

  • CÓRTES-JIMÉNEZ, ISABEL, and Adam Blake (2011), “Tourism Demand Modeling by Purpose of Visit and Nationality”, Journal of Travel Research, 50(4), pp. 408

    Article  Google Scholar 

  • Crouch, Geoffrey I. (1994), “Demand Elasticities for Short-Haul versus Long-Haul Tourism”, Journal of Travel Research, 33, pp. 2–7.

    Article  Google Scholar 

  • Entorf, Horst (1997), “Random Walks with Drifts: Nonsense Regression and Spurious Fixed-Effect Estimation”, Journal of Econometrics, 80(2), pp. 287–296.

    Article  Google Scholar 

  • Falk, Martin (2014), “The Sensitivity of Winter Tourism to Exchange Rate Changes: Evidence for the Swiss Alps”, Tourism and Hospitality Research, 13(2), pp. 101–112.

    Article  Google Scholar 

  • Falk, Martin (2015), “The Sensitivity of Tourism Demand to Exchange Rate Changes: An Application to Swiss Overnight Stays in Austrian Mountain Villages during the Winter Season”, Current Issues in Tourism, 18(5), pp 465–476

    Article  Google Scholar 

  • Ferro Luzzi, Giovanni, and Yves Flückiger (2003), “An Econometric Estimation of the Demand for Tourism: The Case of Switzerland”, Pacific Economic Review, 8(3), pp. 289–303.

    Article  Google Scholar 

  • Greene, William (2007), “Functional Form and Heterogeneity in Models for Count Data”, Foundations and Trends in Econometrics, 1(2), pp. 113–218.

    Article  Google Scholar 

  • Guimarães, Paulo (2008), “The Fixed Effects Negative Binomial Model Revisited”, Economics Letters, 99(1), pp. 63–66.

    Article  Google Scholar 

  • Jaeger, Franz, Rudolf Minsch, and Yngve Abrahamsen (1996), Auswirkungen von Wechselkursschwankungen auf den Schweizerischen Tourismus, Jahrbuch der Schweizerischen Tourismuswirtschaft 1995/96, St. Gallen.

    Google Scholar 

  • Lim, Christine (2006), “A Survey of Tourism Demand Modelling Practice: Issues and Implications”, in International Handbook on the Economics of Tourism, Larry Dwyer and Peter Forsyth, eds., pp. 45–72.

    Google Scholar 

  • Nicolau, Juan L. (2010), “Culture-Sensitive Tourists Are More Price Insensitive”, Journal of Cultural Economics, 34(3), pp. 181–195.

    Article  Google Scholar 

  • Peng, Bo, Haiyan Song, Geoffrey I. Crouch, and Stephen F. Witt (2015), “A Meta-Analysis of International Tourism Demand Elasticities”, Journal of Travel Research, 54, pp. 611–633.

    Article  Google Scholar 

  • Rodrik, Dani (2008), “The Real Exchange Rate and Economic Growth”, Brookings Papers on Economic Activity, 39(2), pp. 365–412.

    Google Scholar 

  • Santos Silva, João M. C., and Silvana Tenreyro (2006), “The Log of Gravity”, The Review of Economics and Statistics, 88(4), pp. 641–658.

    Article  Google Scholar 

  • Song, Haiyan, Stephen F. Witt, and Gang Li (2009), The Advanced Econometrics of Tourism Demand, New York: Routledge.

    Google Scholar 

  • Thompson, Alexi, and Henry Thompson (2010), “The Exchange Rate, Euro Switch and Tourism Revenue in Greece”, Tourism Economics, 16(3), pp. 773–778.

    Article  Google Scholar 

  • Webber, Anthony G. (2001), “Exchange Rate Volatility and Cointegration in Tourism Demand”, Journal of Travel Research, 39(3), pp. 398–405.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Christian Stettler.

Additional information

I thank two anonymous referees and the editor for very insightful comments. I also thank Sophia Ding, Ugo Panizza, Janosch Weiss, Florian Egli, Wanlin Ren, Mark Hack, Michelle Cunningham, Sarah Haag, Elise Grieg, Etienne Michaud, and Martina Hengge for helpful comments. Lastly, I am very grateful to the Swiss Federal Statistical Office for providing the data.

Rights and permissions

Open Access  This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made.

The images or other third party material in this article are included in the article’s Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article’s Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder.

To view a copy of this licence, visit https://creativecommons.org/licenses/by/4.0/.

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Stettler, C. How do Overnight Stays React to Exchange Rate Changes?. Swiss J Economics Statistics 153, 123–165 (2017). https://doi.org/10.1007/BF03399437

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/BF03399437

JEL-Classification

Keywords