Hotel recovery strategies in the post-COVID-19 era: Evidence on revenue, employment, and labor market rigidity from Taiwan

Abstract

This study examines the recovery trajectory of the hotel industry in the post-COVID-19 period in Taiwan, with a particular focus on revenue performance, employment dynamics, service quality, and guest demand. It further evaluates the role of labor market rigidity and heterogeneous recovery patterns across hotel types and locations. Using a comprehensive panel dataset covering all tourist hotels in Taiwan from January 2015 to September 2024, this study employs fixed-effects regression models to estimate the impacts of different pandemic phases on hotel performance. The analysis controls for time-invariant hotel characteristics, seasonal variation, and weather conditions, and further incorporates dynamic specifications and simulation analyses to assess recovery mechanisms. The total and room revenues recovered in the post-COVID period were approximately 9% and 13%, respectively. Moreover, this rebound was primarily driven by higher room rates rather than occupancy. In contrast, employment, service quality, and guest visits remained below pre-pandemic levels, indicating persistent labor shortages consistent with labor market rigidity. Heterogeneity analysis reveals that rural and non-five-star hotels experienced faster recovery than urban and luxury hotels. Simulation results suggest that restoring employment to pre-pandemic levels could increase revenues by up to 17.8%, exceeding the gains from demand recovery alone. The findings highlight the critical importance of workforce recovery in the hotel industry. Managers should prioritize employee retention and recruitment alongside demand stimulation strategies, while policymakers may consider labor market interventions to facilitate a more balanced and sustainable recovery.