Forecasting the city hotel market

City tourism is rapidly gaining in importance. With its fast pace of growth, the city tourism industry needs reliable forecasting models to get useful information on future development trends. But so far we have only a handful of studies that look into forecasting issues related to city tourism. We need to consider that dynamic demand for overnight stays impacts on occupancy rates and room prices and that these variables in turn influence investment in increasing bed capacities. To fill this gap in research, an econometric model of the hotel bed supply and the demand for overnight stays on a monthly basis has been developed for Vienna, Austria. Forecasts for 2013 and 2014 were carried out for overnight stays, bed supply, average daily rates, and, implicitly, also for occupancy rates. A scenario involving a level shift in tourism demand shows the sensitivity of the model.