The role of exchange rate on hotelier’s pricing decision and business performance: the case of Switzerland, a small open economy

Abstract

AbstractThis study focuses on the role of the exchange rate on hotelier’s pricing decision and business performance. This study explores the way hospitality industry practitioners react to exchange rate fluctuations and monetary policy interventions on the FOREX market. By analyzing monthly performance data of hotels in Switzerland between January 2000 and April 2021, this study finds the presence of two structural breaks in the economy, due, respectively, to the central bank’s intervention on the exchange rate market and to the COVID 19. The findings of this study suggest that hoteliers pay close attention to fluctuations in the exchange rate as well as to monetary policies. These findings should raise individual hoteliers’ awareness about their competitors’ behavior and help them better define their strategic decisions in terms of pricing.