Economics in game theory for hotel unemployment

ABSTRACT

This study uses the game theory to find a Nash equilibrium of price elasticities of hotel demand in the United States before and during the COVID-19 pandemic to interpret the decrease in hotel unemployment rate. The sample selected is the Oahu, Hawaii market due to its higher room rate and higher unemployment rate compared to those in the mainland US. Findings indicate that to increase hotel revenue and decrease unemployment rate, the price elasticity of hotel demand in the mainland US would be higher than the one in Oahu, Hawaii. While the government has built more value into hotels by financially supporting unemployed hotel employees, established hotel brands have maintained their excellent service for their guests during the pandemic.

KEYWORDS:

• Price elasticity
• tourism economics
• game theory
• hotel unemployment
• COVID-19

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Notes on contributors

Xuan Tran

Dr. Xuan Tran, a Professor, studies microeconomics and macroeconomics and consumer behavior psychology in hospitality and tourism. Tran’s research has examined economic effects on demand for luxury hotel rooms, hotel brand personality and service quality, and customers’ price sensitivity in upscale lodging. In addition, he has examined aspects of crime and tourism, financial decision-making in the lodging industry, and numerous other issues involving tourism in Asia, Europe and the United States.