Abstract
Given the influence of the financial-economic crisis, hotel room demand in Hong Kong has experienced a significant drop since June 2019. Given that studies on the room rate aspect remains limited, this study considers the demand for hotel rooms from different categories and districts. This study makes forecast attempts for room rates from mid-October of 2019 to mid-June of 2020, which was a difficult period for Hong Kong owing to the onset of the social unrest and novel coronavirus outbreak. This study develops an approach to the short-term forecasting of hotel daily room rates on the basis of the Long Short-Term Memory (LSTM) model by leveraging the key properties of day-of-week to improve accuracy. This study collects a data set containing 235 hotels of the period from various online distribution channels and generates different time series data with the same day-of-week. This study verifies the proposed model through three baseline models, namely, autoregressive integrated moving average (ARIMA), support vector regression (SVR), and Naïve models. Findings shed light on how to lessen the impact of violent fluctuations by combining a rolling procedure with separate day-of-week time series for the hospitality industry. Hence, theoretical and managerial areas for hotel room demand forecasting are enriched on the basis of adjusting room pricing strategies for hoteliers in improving revenue management and making appropriate deals for customers in booking hotel rooms.
Highlights
In many regions worldwide, the tourism industry has become the key or even the only decisive factor that drives local income growth, as well as economic and social changes [1]
As an international tourism destination, Hong Kong is sensitive to global economic conditions [2]
Considering that studies focusing on the room rate aspect are limited, in this paper, we demonstrate how a particular forecasting procedure can be applied to the hotel room rate problem
Summary
The tourism industry has become the key or even the only decisive factor that drives local income growth, as well as economic and social changes [1]. As an international tourism destination, Hong Kong is sensitive to global economic conditions [2]. From June 2019 to the present, tourist arrivals to Hong Kong continue to decline due to the social unrest since June 2019 and the novel coronavirus outbreak since early 2020. The economic crisis kept visitors away from visiting, affecting the sustainability of the tourism industry. As part of the tourism ecosystem, the hotel industry is very important to maintain the local sustainable development [3]. A recent review of hotel supply reports in Hong Kong across different classes of hotels from January 2019 to June 2019 (data source: https://securepartnernet.hktb.com/china/sc/research_statistics/research_ publications/index.html?id=3634) shows that the average room and occupancy rates were 1329 and
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