Abstract
The primary objective of this study is to develop an empirical model that accounts for factors affecting the demand for international tourist hotels, and that enables demand estimation and projection in the context of the Seoul metropolitan area. International hotel demand for a metropolitan area such as Seoul is hypothesized as a function of the price of hotel rooms, the number of events such as international conventions, seminars and exhibitions; and total trade volume of the destination country. The dependent variable is the number of bed nights occupied by foreign guests in a given period. The study discusses a procedure for correctly estimating a time-series regression model. Consideration is given to the possibility that errors in the model are generated by a time-dependent process more than by a first-order autoregressive process. The findings of the study revealed that own price, the number of events and the trade volume directly affected demand. Some factors were proven to affect the demand indirectly through adjustment of price in the short run. Further the study revealed that demand is a function of the entire market mechanism, which is the inter-relationship of demand and price among different market segments.
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