Measuring the effect of infectious disease-induced uncertainty on hotel room demand: A longitudinal analysis of U.S. hotel industry
Abstract
This study investigates the effect of infectious disease uncertainty on hotel room demand covering the period 2005–2020. Also, the extent to which the effect of uncertainty borne by infectious diseases varies across different hotels segments are examined. Furthermore, the latest infectious disease pandemic, COVID-19, was used to test the joint impact of state-imposed restrictions and infectious disease uncertainty on hotel room demand. Using Infectious Disease Equity Market Volatility (EMV-ID) tracker as a proxy for uncertainty, the findings showed that infectious disease uncertainty leads to a decline in state-level hotel occupancy both in the short- and long-run. These results rule out the potential confounding effect of state-level restrictions by demonstrating that EMV-ID accounts for additional variance in hotel demand. Findings also indicate that this negative effect is not uniform across hotel segments; the greater levels of state-imposed restrictions lead to decreases in hotel room demand. Practical and research implications are discussed.