The impact of international tourism on hotel sales performance: New proposals and evidence

Abstract

Using data from 31 provinces/municipalities in China from 2003 to 2018, this article examines the impact of international tourism on hotel sales revenue (HSR). Specifically, this study lays a theoretical foundation for investigations of the nonlinear and state-dependent effects of international tourist arrivals (ITAs) on HSR. Results of both traditional and dynamic panel regression test models reveal the following interesting results. First, the positive relationship between ITA and hotel performance is not unique to Taiwan but is also found in Mainland China. Second, based on the theory of economies of agglomeration, the impact of ITA on HSR is found to be inverse U-shaped. Third, the effects of ITA on HSR are economic state-dependent, relying to a great extent on economic conditions. Furthermore, ITA has a stronger impact on HSR during periods of economic expansion. Important policy implications are provided based on the empirical results.