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The sensitivity of tourism demand to exchange rate changes: an application to Swiss overnight stays in Austrian mountain villages during the winter season

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  • Martin Falk

Abstract

This paper investigates the impact of the depreciation of the euro against the Swiss franc on tourism demand. The data consist of Swiss overnight stays in West Austrian ski resorts during the winter season. Using a panel error correction model, we found that the elasticity of tourism demand with respect to exchange rates is significantly larger than unity in absolute terms. In particular, the real exchange rate elasticity ranges between −1.5 using the dynamic panel data model and −2.2 for the long difference regression model. This indicates that Swiss winter tourists are highly sensitive to changes in exchange rates and relative prices. High elevation ski resorts benefit most from the depreciation of the euro against the Swiss franc. For Austrian ski resorts, tentative estimates suggest that the depreciation of the euro against the Swiss franc has led to an additional 173,000 overnight stays over the last four winter seasons.

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  • Martin Falk, 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, Taylor & Francis Journals, vol. 18(5), pages 465-476, May.
    • Handle: RePEc:taf:rcitxx:v:18:y:2015:i:5:p:465-476
    DOI: 10.1080/13683500.2013.810610
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    Cited by:

    1. Yamaka, Woraphon & Zhang, Xuefeng & Maneejuk, Paravee & Ramos, Vicente, 2023. "Asymmetric effects of third-country exchange rate risk: A Markov switching approach," Annals of Tourism Research, Elsevier, vol. 103(C).
    2. Uju Violet Alola & Ojonugwa Usman & Andrew Adewale Alola, 2023. "Is pass-through of the exchange rate to restaurant and hotel prices asymmetric in the US? Role of monetary policy uncertainty," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 9(1), pages 1-19, December.
    3. Lázaro Florido-Benítez, 2023. "English, German, and French Tourists Are Key to the Success of Andalusian Destinations (Spain)," Sustainability, MDPI, vol. 15(16), pages 1-22, August.

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