How do Overnight Stays React to Exchange Rate Changes?
Swiss Journal of Economics and Statistics volume 153, pages 123–165 (2017)
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.
Abrahamsen, Yngve, and Banu Simmons-Süer (2011), “Die Wechselkursabhängigkeit der Schweizer Wirtschaft“, KOF Studien, no. 24.
Allision, Paul D., and Richard P. Waterman (2002), “Fixed-Effects Negative Binomial Regression Models”, Sociological Methodology, 32(1), pp. 247–265.
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.
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.
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.
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.
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.
Correia, Sergio (2014), “Least Squares Iteration with Several High-Dimensional Fixed Effects”, Mimeo.
CÓRTES-JIMÉNEZ, ISABEL, and Adam Blake (2011), “Tourism Demand Modeling by Purpose of Visit and Nationality”, Journal of Travel Research, 50(4), pp. 408
Crouch, Geoffrey I. (1994), “Demand Elasticities for Short-Haul versus Long-Haul Tourism”, Journal of Travel Research, 33, pp. 2–7.
Entorf, Horst (1997), “Random Walks with Drifts: Nonsense Regression and Spurious Fixed-Effect Estimation”, Journal of Econometrics, 80(2), pp. 287–296.
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.
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
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.
Greene, William (2007), “Functional Form and Heterogeneity in Models for Count Data”, Foundations and Trends in Econometrics, 1(2), pp. 113–218.
Guimarães, Paulo (2008), “The Fixed Effects Negative Binomial Model Revisited”, Economics Letters, 99(1), pp. 63–66.
Jaeger, Franz, Rudolf Minsch, and Yngve Abrahamsen (1996), Auswirkungen von Wechselkursschwankungen auf den Schweizerischen Tourismus, Jahrbuch der Schweizerischen Tourismuswirtschaft 1995/96, St. Gallen.
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.
Nicolau, Juan L. (2010), “Culture-Sensitive Tourists Are More Price Insensitive”, Journal of Cultural Economics, 34(3), pp. 181–195.
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.
Rodrik, Dani (2008), “The Real Exchange Rate and Economic Growth”, Brookings Papers on Economic Activity, 39(2), pp. 365–412.
Santos Silva, João M. C., and Silvana Tenreyro (2006), “The Log of Gravity”, The Review of Economics and Statistics, 88(4), pp. 641–658.
Song, Haiyan, Stephen F. Witt, and Gang Li (2009), The Advanced Econometrics of Tourism Demand, New York: Routledge.
Thompson, Alexi, and Henry Thompson (2010), “The Exchange Rate, Euro Switch and Tourism Revenue in Greece”, Tourism Economics, 16(3), pp. 773–778.
Webber, Anthony G. (2001), “Exchange Rate Volatility and Cointegration in Tourism Demand”, Journal of Travel Research, 39(3), pp. 398–405.
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.
About this article
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
- Real Exchange Rate
- Overnight Stays
- Swiss Franc