Currency conundrum: unraveling the impact of exchange rates on Nordic hotel pricing, occupancy, and revenue in Finland, Norway, and Sweden

ABSTRACT

The analysis is aimed at comprehending the interplay between exchange rates, hotel pricing, occupancy, and revenue per available room in three Nordic countries (Finland, Norway, and Sweden) using a novel approach of dynamic common correlated effects that can handle cross-sectional interdependencies, variations, and dynamics within the data. The paper finds that exchange rate appreciation has a significant adverse outcome on hotel occupancy rates but a positive effect on revenue per available room. In contrast, exchange rate fluctuations did not significantly impact hotel room prices, implying that hotels in Nordic countries can effectively consider the asymmetric influences of exchange rate fluctuations in setting room prices. The paper discusses implications for hotel managers and policymakers in coping with exchange rate fluctuations and optimizing hotel pricing.

KEYWORDS:

• Hotel performance
• exchange rate
• asymmetric effect
• dynamic common correlated effects estimator

Disclosure statement

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