Impact of the Rouble's Depreciation on Russian Overnight Stays in Finnish Regions and Cities: Research Note

Tourism Economics, Vol 22(1), February 2016

15 Pages Posted: 29 Apr 2016 Last revised: 10 Nov 2016

See all articles by Martin Falk

Martin Falk

ZEW – Leibniz Centre for European Economic Research

Markku J. Vieru

University of Lapland - Faculty of Social Sciences, Multidimensional Tourism Institute

Date Written: March 11, 2016

Abstract

This paper investigates how the depreciation of the Russian rouble against the euro has affected Russian tourism demand in Finnish regions and cities. Using dynamic panel data models, the authors find that the elasticity of Russian tourists’ overnight hotel stays with respect to exchange rates is significantly larger than one (approximately 1.6) in absolute terms, indicating that Russian tourists are highly sensitive to changes in exchange rates. There is some evidence that the sensitivity of Russian tourism demand increased following the introduction of economic sanctions in August 2014. The sensitivity of tourism demand to exchange rate changes differs highly across regions and cities, with higher elasticities in border regions and cities not too far from the Russian border. These regions and areas attract a significant number of short-stay Russian visitors, who are often motivated by cross-border shopping and other activities.

Keywords: tourism demand, cross-border tourism, regions, cities, exchange rate changes, panel data model

Suggested Citation

Falk, Martin and Vieru, Markku, Impact of the Rouble's Depreciation on Russian Overnight Stays in Finnish Regions and Cities: Research Note (March 11, 2016). Tourism Economics, Vol 22(1), February 2016 , Available at SSRN: https://ssrn.com/abstract=2771871

Martin Falk

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1 D-68161 Mannheim
Germany

Markku Vieru (Contact Author)

University of Lapland - Faculty of Social Sciences, Multidimensional Tourism Institute ( email )

P.O. Box 122
Rovaniemi FIN-96101
Finland
+358 400 377641 (Phone)
+358 16 341 2600 (Fax)

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