Structural breaks and volatility persistence in hotel occupancy rate

Abstract

Purpose: Although Singapore has been one of the most attractive destinations for international tourists over the past 20 years, little evidence exists on the dynamics of its hotel occupancy rate. Our study aims to extend this scarce literature

Design/Methodology/Approach: The present study employs time-varying volatility processes (e.g., GARCH process) and models the uncertainty associated with the hotel occupancy rate in Singapore.

Findings: The main results indicate that shocks to the occupancy rate have a long run persistence and that there are asymmetric impacts in the occupancy rate. Further analysis suggests that structural breaks emanating from extreme news or shocks exert substantial impacts on the level of uncertainty for hotel occupancy rate.

Originality/Value: Managers in the hotel industry could benefit from our findings while adopting active measures to reduce risk in tourism demand and hotel occupancy and attract more international tourists.