Tourism Stock Research Articles

Effects of shifts in monetary policy on hospitality stock performance

This study investigates the effects of changes in monetary policy on the stock performance of hospitality firms (airlines, hotels, restaurants and tourism firms) in Hong Kong. Changes in the monetary policy environment are measured by changes in the discount rate. Among the four hospitality sectors, hotel and tourism stocks exhibit a higher mean return and reward-to-risk ratio during expansive monetary periods. Regression test results also support the contention that different monetary policy circumstances have significant influences on the hotel and tourism stock performance. Lastly, a market timing investment strategy is proposed for hospitality stock investors to allocate their portfolios between hospitality stocks and risk-free assets according to movements in monetary policy environments. Following this market timing investment strategy, hospitality stock investors can significantly improve investment performance by achieving higher returns and lower risk.

The Impact of Government Weekend Policy Changes and Foreign Institutional Holdings On Weekly Effect of Tourism Stock Performance

Since the Taiwanese government implemented a 2-day weekend policy, traveling activities have become increasingly popular, and foreign institutional holdings (FIHs) on stocks of tourism firms have soared. This study investigates the influence of the weekend policy changes and increasing FIHs on the weekly effect of tourism stock returns over the period between 1994 and 2004. First, this study tests whether there is any weekly effect of tourism stock returns and whether weekly effects, if any, persist or diminish after the weekend policy changes. It is found that a significantly negative Tuesday effect on tourism stock returns existed. Second, the impact of the increasing FIHs on the negative Tuesday effect is examined. The increasing FIHs on tourism stocks not only weaken the negative Tuesday effect, but also decrease the risk of negative Tuesday returns. Policy implications based on the main findings are provided to guide tourism business managers, policy makers and investors.

Institutional investors and the Monday effect on tourism stocks

Stock return for the general market on Mondays reverses trend in the 1990s, and is positive in most of the years in that period. However, Monday stock return in the 1980s is still significantly negative (this significantly negative Monday return is called the Monday effect). Tourism stocks are known to be more volatile than the general market in the US. In this study, we concentrate on tourism stocks and find that they exhibit the same trends as that of the general stock market. We further divide tourism stocks into four different sectors: (1) Eating and Drinking Places, (2) Hotels, Rooming Houses, Camps, and other Lodging Places, (3) Amusement and Recreation Services and (4) Scheduled Air Transportation. We found different trends among the four different sectors, and they are clearly related to the percentage of institutional investors in the sectors. Our findings have strong implications on how to attract more institutional investors into the tourism industry, which is one of the most important ways to finance future growth in that industry.