The dynamic interactions between hotel room rates and international inbound tourists: Evidence from Singapore

Recognizing the possible existence of mutual interactions between hotel room rates and the number of international inbound tourists, this research note investigates the short-run and the long-run dynamic interactions between these two variables for Singapore. It tests for the existence of any cointegrating relationship between them using the bounds testing approach to cointegration. The causal effects between them are tested with Granger causality test. We find no evidence that Singapore's hotel room rates and international inbound tourists are cointegrated. The results also suggest that there is a bi-directional short-run causal relationship between these variables.