The effect of economic policy uncertainty on hotel room demand-evidence from Mainland Chinese and Japanese tourists in Taiwan

ABSTRACT

This paper uses the Markov regime-switching model to explore the effect of economic policy uncertainty on Mainland Chinese and Japanese tourists’ room demands in Taiwanese international tourist hotels. Results show that Mainland Chinese and Japanese tourists tend to decrease their room demands in the trough period of Taiwan’s international tourist hotels due to the lack of certainty and limited knowledge about economic policy. Empirical evidence indicates that the hotel business is very sensitive to economic policy uncertainty.

KEYWORDS:

• Economic policy uncertainty
• Markov regime-switching model
• room demand
• hotel industry

Disclosure statement

No potential conflict of interest was reported by the authors.