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How do Overnight Stays React to Exchange Rate Changes?

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  • Christian Stettler

Abstract

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.

Suggested Citation

  • Christian Stettler, 2017. "How do Overnight Stays React to Exchange Rate Changes?," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 153(II), pages 123-165, June.
    • Handle: RePEc:ses:arsjes:2017-ii-3
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    References listed on IDEAS

    as
    1. Guillaume Chevillon & Xavier Timbeau, 2006. "L'impact du taux de change sur le tourisme en France," Revue de l'OFCE, Presses de Sciences-Po, vol. 98(3), pages 167-181.
    2. Greene, William, 2007. "Functional Form and Heterogeneity in Models for Count Data," Foundations and Trends(R) in Econometrics, now publishers, vol. 1(2), pages 113-218, August.
    3. Nicolas Berman & Philippe Martin & Thierry Mayer, 2012. "How do Different Exporters React to Exchange Rate Changes?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 127(1), pages 437-492.
    4. Entorf, Horst, 1997. "Random walks with drifts: Nonsense regression and spurious fixed-effect estimation," Journal of Econometrics, Elsevier, vol. 80(2), pages 287-296, October.
    5. Dani Rodrik, 2008. "The Real Exchange Rate and Economic Growth," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 39(2 (Fall)), pages 365-439.
    6. Richard E. Baldwin & Virginia Di Nino, 2006. "Euros and Zeros: The Common Currency Effect on Trade in New Goods," NBER Working Papers 12673, National Bureau of Economic Research, Inc.
    7. repec:bla:pacecr:v:8:y:2003:i:3:p:289-303 is not listed on IDEAS
    8. Larry Dwyer & Peter Forsyth (ed.), 2006. "International Handbook on the Economics of Tourism," Books, Edward Elgar Publishing, number 2827.
    9. Yngve Abrahamsen & Banu Simmons-Süer, 2011. "Die Wechselkursabhängigkeit der Schweizer Wirtschaft," KOF Analysen, KOF Swiss Economic Institute, ETH Zurich, vol. 5(1), pages 61-74, March.
    10. repec:hal:spmain:info:hdl:2441/1743 is not listed on IDEAS
    11. Athanasopoulos, George & Deng, Minfeng & Li, Gang & Song, Haiyan, 2014. "Modelling substitution between domestic and outbound tourism in Australia: A system-of-equations approach," Tourism Management, Elsevier, vol. 45(C), pages 159-170.
    12. Juan Nicolau, 2010. "Culture-sensitive tourists are more price insensitive," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 34(3), pages 181-195, August.
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    Cited by:

    1. Martin Falk & Markku Vieru, 2017. "Impact of rouble’s depreciation on Russian overnight stays in Finnish regions and cities," Tourism Economics, , vol. 23(4), pages 854-866, June.
    2. Martin Falk & Xiang Lin, 2018. "Income elasticity of overnight stays over seven decades," Tourism Economics, , vol. 24(8), pages 1015-1028, December.
    3. Leiv Opstad & Randi Hammervold & Johannes Idsø, 2021. "The Influence of Income and Currency Changes on Tourist Inflow to Norwegian Campsites: The Case of Swedish and German Visitors," Economies, MDPI, vol. 9(3), pages 1-13, July.
    4. Irandoust, Manuchehr, 2019. "On the relation between exchange rates and tourism demand: A nonlinear and asymmetric analysis," The Journal of Economic Asymmetries, Elsevier, vol. 20(C).
    5. Isabella Blengini & Cindy Yoonjoung Heo, 2024. "The role of exchange rate on hotelier’s pricing decision and business performance: the case of Switzerland, a small open economy," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 23(3), pages 206-216, June.

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    More about this item

    Keywords

    Real exchange rate; tourism; overnight stays; Swiss Franc; Switzerland;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • Z31 - Other Special Topics - - Tourism Economics - - - Industry Studies

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