The Impact of Exchange Rates on Hotel Occupancy

ABSTRACT

In many hospitality and tourism programs, students are usually required to take only the most basic finance course. This can leave them drastically under-prepared for real-world situations. Hospitality and tourism is the world's single largest industry and probably one of the industries most affected by foreign exchange movements. This exposure to foreign exchange movements is magnified by the discretionary nature of hospitality and tourism spending, making the profitability of hospitality providers very sensitive to changes in the exchange rate. This paper explores the effect, if any, of a change in the dollar value of five currencies–UK pound, euro, Canadian dollar, Japanese yen, and Mexican peso–on the hotel occupancy in seven major U.S. tourist destinations–Orlando, Los Angeles, Washington, D.C., New York, San Francisco, Miami, and Las Vegas.