Effect of price instability on hotel profitability

• Chiang-Ming Chen ^[1] ; Kuo-Liang Chang ^[2]
  1. [1] National Chi Nan University

     National Chi Nan University

     Puli Township, Taiwán

     
  2. [2] South Dakota State University

     South Dakota State University

     City of Brookings, Estados Unidos

     
• Localización: Tourism economics: the business and finance of tourism and recreation, ISSN 1354-8166, Vol. 18, Nº. Extra 6, 2012 (Ejemplar dedicado a: Developments in the field of tourism economics), págs. 1351-1360
• Idioma: inglés
• Texto completo no disponible (Saber más ...)
• Resumen

  • This paper investigates the influence of price instability on hotel profitability based on Taiwanese international tourist hotel operation data from 1996 to 2008. According to Tisdell (1963), price instability leads to a decrease in the profits of an entrepreneur if the output, once planned, is unalterable. The inflexible supply and volatile demand of the hotel industry offer an ideal case study to confirm Tisdell�s theory. This paper provides an empirical test of Tisdell�s model, and the authors find that price instability has a statistically significant and negative effect on hotel profitability. The study results lend support to the validity of the price instability hypothesis in Tisdell�s model.