Global Financial/Economic Crisis and Tourist Arrival Forecasts for Hong Kong

This paper examines the impact of the global financial/economic crisis on the demand for Hong Kong tourism by residents of 10 major source markets for the period 2009–2012. To capture the influence of this crisis, the Autoregressive Distributed Lag Model (ADLM) is used to calculate the demand elasticities, and four scenarios (ranging from the most pessimistic to the most optimistic) are created to examine the possible impacts of changes in source market income levels and the price of tourism on the demand for Hong Kong tourism in these markets. The demand elasticities reveal that the economic conditions in the source markets are the most significant determinants of demand for Hong Kong tourism. In the most pessimistic scenario, total tourist arrivals to Hong Kong are projected to reach 27.6 million in 2009 and 26.0 million in 2012, whereas in the most optimistic scenario, these numbers are 30.7 million in 2009 and 33 million in 2012. In all of the scenarios, tourist arrivals from the long-haul markets are expected to suffer more losses relative to the short-haul markets during the 2009–2012 forecasting period. The forecasts also indicate that the market shares of the source markets will change slightly over this period, with Mainland China, Taiwan and Japan constituting the dominant markets for Hong Kong tourism.     

Data Mining For Hotel Occupancy Rate: An Independent Component Analysis Approach

The recent global financial crisis and the threat of a worldwide H1N1 influenza epidemic have greatly affected the tourism and hospitality industries around the world. Both hospitality practitioners and researchers are interested in finding analytical methods that enable forecasts to be made of hotel room demand under the uncertain conditions likely to affect the industry. In this article, a novel data mining technique called independent component analysis (ICA) is proposed to establish the major factors determining the hotel occupancy rate in Hong Kong. Then, extension of the model is suggested, incorporating these factors to decompose hotel occupancy rates and examine the effect of each factor on the hotel occupancy rate. Empirical findings show that outbreaks of infectious diseases, economic performance, and service price were the major determinants of the hotel occupancy rate in Hong Kong over the period studied.     

Modelling and forecasting the demand for Hong Kong tourism

The main objectives of this paper are to identify the factors which contribute to the demand for Hong Kong tourism with the aid of econometric models and to generate forecasts of international tourism arrivals to Hong Kong for the period 2001–2008. The general-to-specific modelling approach is followed to model and forecast the demand for Hong Kong tourism by residents from the 16 major origin countries/regions and the empirical results reveal that the most important factors that determine the demand for Hong Kong tourism are the costs of tourism in Hong Kong, the economic condition (measured by the income level) in the origin countries/regions, the costs of tourism in the competing destinations and the ‘word of mouth’ effect. The demand elasticities and forecasts of tourism arrivals obtained from the demand models form the basis of policy formulations for the tourism industry in Hong Kong.     

A simultaneous equations model of the hotel room supply and demand in Hong Kong

The purpose of the study is to identify the important factors that influence the hotel room supply and demand, and their overall impact on the Hong Kong hotel industry. Nineteen years of time series data are used and a simultaneous equations econometric model is employed. The overall goodness-of-fit of both demand and supply models is very high, suggesting high predictive power. Empirical results indicate that “hotel room price” and “tourist arrivals” are significant factors driving the demand for hotel rooms. In addition, “1990–91 recession” and “the 1997–98 Asian financial crisis” had a significant negative impact on the demand for hotel rooms in Hong Kong. At the same time, “hotel room quantity demanded”, “room occupancy rate”, “last period's room price”, “labor cost”, “last period's average price of Grade A private offices”, and “the Asian financial crisis” all have a significant impact on room price in the short run.     

The impact of the Asian financial crisis on Japanese demand for travel to Hong Kong: A study of various forecasting techniques

The Asian financial crisis has drawn worldwide attention because of its significant economic impact on local economics, especially on the economy of a tourism‐dependent destination. Unfortunately, there have been very few articles about the relationship of the Asian financial crisis and tourism demand forecasting. This relative lack of prior studies on the Asian financial crisis and tourism demand forecasting is particularly true in the context of Hong Kong. This article reports on a study that utilized officially published data to test the accuracy of forecasts of Japanese demand for travel to Hong Kong, measured in terms of the number of Japanese tourist arrivals. Seven commonly‐used tourism forecasting techniques were used to determine the forecasting accuracy. The quality of forecasting accuracy was measured in five dimensions. Experimental results indicated mixed results in terms of forecasting accuracy. Overall, artificial neural network outperformed other techniques in three of the five dimensions.     

Optimizing Room Capacity and Profitability for Hong Kong Hotels

This study estimates optimal guestroom capacity for the Hong Kong hotel industry during 2010–2013 using a single-period inventory model. Using Hong Kong hotel operational data for the period 2000–2009, we identify an issue of serious overcapacity of Hong Kong hotels for 2010–2013, the severity of which ranges from 30.6 to 40.7% above the optimal hotel guestroom counts derived from our study. We further estimate an optimal advertising budget as a percentage of total revenue (3.78%) in maximizing profitability. Attention is called for stakeholders to carefully reexamine existing and future hotel development plans and work on pushing up future room demand. The implications of our study are also discussed.     

The Importance of Hotel Attributes in Contributing to Travelers' Satisfaction in the Hong Kong Hotel Industry

Abstract

This study surveyed 402 international travelers to explore their satisfaction levels towards service and facility quality in three Hong Kong hotel market segments, High-Tariff A, High-Tariff B and Medium Tariff. Six perception dimensions were extracted from 33 hotel attributes by a factor analysis. All six dimensions had a significant impact on the overall satisfaction of travelers with service quality and facilities in the three Hong Kong hotel market segments. Quality of Staff Performance was the most influential factor followed by Quality of Room Facilities, Value for Money, Variety and Efficient Services, Business Related Services, and Safety and Security respectively. It was found that travelers had the lowest satisfaction level towards the Medium-Tariff hotel segment. By identifying the most influential hotel dimension in influencing travelers' satisfaction levels, hoteliers will be in an advantageous position to formulate tactics to meet the changing needs and expectations of travelers. Implementing human resources training that emphasizes the fact that service quality is part of each employee's job should have a significant impact on guest re-purchase intention. The importance of value segmentation cannot be overlooked by hoteliers. Travelers will continue to expect hotels to provide more value-for-money services and facilities and they are expected to shift their purchasing decision to an economic value basis.     

Forecasting tourism recovery amid COVID-19

The profound impact of the coronavirus disease 2019 (COVID-19) pandemic on global tourism activity has rendered forecasts of tourism demand obsolete. Accordingly, scholars have begun to seek the best methods to predict the recovery of tourism from the devastating effects of COVID-19. In this study, econometric and judgmental methods were combined to forecast the possible paths to tourism recovery in Hong Kong. The autoregressive distributed lag-error correction model was used to generate baseline forecasts, and Delphi adjustments based on different recovery scenarios were performed to reflect different levels of severity in terms of the pandemic's influence. These forecasts were also used to evaluate the economic effects of the COVID-19 pandemic on the tourism industry in Hong Kong.     

The Response of Hotels to Increasing Food Costs due to Food Shortages

During 2008–2009 the hotel industry in Hong Kong had to respond to a steady price increase in general food items and in basic food commodities. As most hotels in Hong Kong predict their food cost budgets a year in advance, these sudden and unexpected increases in food commodities came at a time when there was a downturn in the global economy in the wake of the financial crisis and a worldwide influenza A (H1N1) epidemic. There have been articles published in hospitality and tourism journals that have discussed the issue of food cost and control in hotels resulting from poor storage and purchasing, portion control, and preparation and production methods. However, none of the previous studies has examined the sudden and rapid increases in the cost of foods and the impact that this has had on the hotel industry. The measures adopted by Hong Kong hotels of different tiers to control or reduce expected food costs are analyzed in this study. This study employed a cross-sectional exploratory design, encompassing in-depth personal interviews with food and beverage managers and executive chefs in high-, mid- and low-tier hotels in Hong Kong. Empirical findings revealed that mid- and low-tier hotels found the increases in commodity prices challenging and thus employed innovative methods to combat rising food costs. High-tier hotels were more concerned about satisfying customers' needs by maintaining high-quality food products and services. The findings indicate that hotels and restaurants at all points of the market adopted functional strategies to increase their efficiency and profitability. Based on the operating experience of existing hotels, this study demonstrates that enhancing the quality of suppliers' commodities, good staff communication and training practices, and innovative ideas can improve a hotel's financial situation.     

The Relationship Between Demographic Characteristics and Socialization Outcomes Among New Employees in Hong Kong Hotels

Abstract

High turnover among new hotel employees has become a major concern for Hong Kong hotel managers. Previous studies have shown that the demographic characteristics of employees are related to their subsequent behavior and attitude. However, there is little vigorous discussion on new employees in particular. This study examines the relationship between the demographic characteristics of new employees and their socialization outcomes in the Hong Kong hotel industry. Its findings show that there are significant differences between the effects of certain demographic characteristics on job satisfaction, organizational commitment and turnover intentions. Some recommendations for maintaining new employees' productivity and minimizing turnover intentions are made for hotel managers' consideration.     

Forecasting turning points in tourism growth

Tourism demand exhibits growth cycles, and it is important to forecast turning points in these growth cycles to minimise risks to destination management. This study estimates logistic models of Hong Kong tourism demand, which are then used to generate both short- and long-term forecasts of tourism growth. The performance of the models is evaluated using the quadratic probability score and hit rates. The results show that the ways in which this information is used are crucial to the models’ predictive power. Further, we investigate whether combining probability forecasts can improve predictive accuracy, and find that combination approaches, especially nonlinear combination approaches, are sensitive to the quality of forecasts in the pool. In addition, model screening can improve forecasting performance.     

Crisis Management During the SARS Threat

ABSTRACT

No one could have predicted the outbreak of SARS and its impact on the tourism business. Within a fortnight, hotel occupancy dropped by more than 80% to a single digit record. The hotel industry in Hong Kong was largely caught unprepared, and had to quickly work out ways in which to mitigate the loss of business and profit. This paper identifies the impact of SARS on hotels in Hong Kong, and the relevant human resources strategies used to tackle the crisis. The findings show that unpaid leave and involuntary separation were the most common immediate solutions adopted by the hotels.     

Availability management of hotel rooms under cooperation with online travel agencies

Hotels are required to pay high commission fees when cooperating with online travel agencies (OTAs) to manage online marketing channels. Thus, to maximize their revenues, hotels protect their income through their own (traditional) marketing channels and save on considerable commissions by optimizing room availability for their cooperative OTAs. The present paper proposes a method to manage such availability in the context of a hotel cooperating with an OTA on room booking service. Customers can make reservations directly through the distribution channel of the hotel or indirectly through the OTA, if applicable, during the selling period. The hotel then forecasts room demand base on distribution information after receiving enough room bookings and optimizes room availability with respect to its maximum revenue by determining whether on-hand rooms are available for the OTA. Results indicate when hotel rooms become unavailable for the cooperative OTA. Numerical studies reveal that this method is conducive to the improvement of hotel revenue.     

An analysis of the relationship between market orientation and business performance in the hotel industry

The purpose of this study was to conduct an investigation into the link between market orientation and business performance in the hotel industry. Data were generated from 63 hotels in Hong Kong. The findings indicated that market orientation is positively and significantly associated with the marketing performance and financial performance of a hotel. The implications of the findings are discussed and the limitations of the study as well as future research directions are addressed.     

Hotel Employees' Perception of the Statutory Minimum Wage Policy in Hong Kong

Employee compensation is one of the largest expenses for businesses. Given the labor-intensive nature of the hotel industry, hotel employees' perceptions of the statutory minimum wage (SMW) policy have become a major concern for hotel operators since the introduction of the policy in Hong Kong. This exploratory study examines these perceptions, together with hotel employees' job and compensation satisfaction and intention to leave, since the introduction of the SMW policy. A survey of 161 hotel employees in Hong Kong was carried out. Respondents demonstrated high awareness of the SMW policy but viewed its effect on the hotel industry as limited. The largest gap between the perceived importance of, and satisfaction with, a factor related to job satisfaction was found for the benefits package. As well as making a contribution to the academic literature, this study provides practical implications of the SMW policy for the hotel industry in Hong Kong and other countries considering adopting a similar measure.     

A decomposition-ensemble approach for tourism forecasting

With the frequent occurrence of irregular events in recent years, the tourism industry in some areas, such as Hong Kong, has suffered great volatility. To enhance the predictive accuracy of tourism demand forecasting, a decomposition-ensemble approach is developed based on the complete ensemble empirical mode decomposition with adaptive noise, data characteristic analysis, and the Elman's neural network model. Using Hong Kong tourism demand as an empirical case, this study firstly investigates how data characteristic analysis is used in a decomposition-ensemble approach. The empirical results show that the proposed model outperforms other models in both point and interval forecasts for different prediction horizons, indicating the effectiveness of the proposed approach for forecasting tourism demand, especially for time series with complexity.     

Is there stability underneath health risk resilience in Hong Kong inbound tourism?

The impacts of health crises on tourism demand vary according to the crises’ magnitude, causes, and recoverability. In some cases, the effects of these unexpected incidents have been severe. This study investigates the underlying stability of Hong Kong’s inbound tourism during three phases of health events. Data on 14 market sources for Hong Kong tourism are compared and the results discussed. Specific examinations suggest that travel from India, the U.S., the U.K., Indonesia, and the Philippines are, somewhat, less influenced by health crises in Hong Kong. Men, unmarried travelers, non-working vacationers, and repeat visitors display resilient tendencies. Expenditure tends to decrease during crises, although lengths of stay tend to increase. The inclusion of three types and phases of health crisis events and their effects on inbound travel markets suggest that the impacts of health crisis events differ according to the profile of health crisis. Implications and suggestions for future studies are discussed.     

Survival analysis of the Spanish hotel industry

The main objective of this study is an analysis of survival in the Spanish hotel industry. We used a sample of 1033 hotels opened from 1997 to 2009, examining financial and non-financial variables, including size; location; type of hotel; management, economic and financial structure and the year they opened, whether during an expansion or crisis period. The methodology included an econometric analysis of survival, using the non-parametric Kaplan–Meier estimator of constructed variables, in order to detect the particular influence of each variable. Semi-parametric regression was done with the Cox proportional hazards model, confirming which variables clearly influenced the survival of hotels and which signs existed for each analysed variables’ influence. The survival of hotels depends on their size, location, management and launch in a time of prosperity. However, survival rates were not significantly tied to particular types of hotels or configurations of their economic and financial structures.     

A Cross-cultural comparison of customer complaint behavior in restaurants in hotels

This study documented consumer complaint behavior in hotel restaurants in two diverse cosmopolitan cities, Hong Kong, SAR and Houston, USA. It was found that in the area of food and beverage attributes, the Hong Kong group rated tastiness, temperature and freshness less important to make a complaint about the Houston group. As for service, service efficiency, greetings, attentiveness and helpfulness were rated differently, with the Hong Kong group rated “greetings” higher than the Houston counterparts. Regarding atmospherics, the two groups were most alike, though the Hong Kong group would be more likely to complain about the noise level while the Houston group, temperature and décor of hotel restaurants.