Effects of Abnormal Weather Conditions on the Performance of Hotel Firms

Abstract

Weather is one of the critical factors that influence tourists’ destination choices and activities. Apart from ambient temperature anomaly, rain anomaly is also an important factor considered by tourists when they plan and modify their vacation and holiday trips. This study confirms the important role of abnormal weather conditions in explaining hotel performance, such as occupancy, average daily rate, and revenue per available room. Moreover, operational performance indicators are observed to exhibit dynamic patterns in response to abnormal weather conditions in accordance with different types/classes of hotels. Evidence indicates that tourists prefer to stay at full-service hotels with complete facilities rather than at hotels with limited facilities and services during an abnormally heavy rain situation. Therefore, the findings of this research suggest a useful determinant (i.e., weather changes) of revenue management practices for hotel firms to maximize their operating performance.