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Vacancies for the industry are increased by the vacancy creation rate and decreased by the vacancy closure rate, which is set equal to the hiring rate (Eq. 14).8 The hiring rate for the industry is captured as the sector attempts to replace those employees who leave and eliminate any discrepancy between the desired and actual number of workers (Eq. 16). Hoteliers determine the desired number of workers by maintaining, over time, the ratio of expected visitors to employees. Additionally, hoteliers determine the desired level of vacancies as the number of persons that will yield the desired hiring rate given their belief about how long it takes to fill a position. Vacancies (t) = Vacancies (t– dt) + (Vacancy Creation Rate – Vacancy Closure Rate)*dt where Vacancy Creation Rate = MAX(0, Desired Vacancy Creation Rate) (14) (15)

Decision rules for the Labour Market Sector

Desired Vacancy Creation Rate = Desired Hiring Rate + Adjustment for Vacancies where Adjustment for Vacancies = (Desired Vacancies – Vacancies)/ Time to Adjust Vacancies

Desired Hiring Rate = Expected Attrition Rate + Adjustment for Labour Adjustment for Labour = (Desired Labour - Labour)/ Time to Adjust Labour where Desired Labour = Labour to tourist ratio*(Annual Tourism)


(17) (18) (19)

Equations 20 to 24 capture the decision rules of the sector concerning their demand for labour during a downturn. The layoff rate is the magnitude of the desired hiring rate when the rate is negative (Eq. 21). The implication is that hoteliers are just as willing to hire to fill vacancies as they are to lay-off to eliminate ‘excess’ employees in the event of a downturn. The same formulation is used to model the vacancy cancellation rate.

Layoff Rate = MIN (Desired Layoff Rate, Maximum Layoff Rate)

Desired Layoff Rate = MAX (0, - Desired Rate)

Vacancy Cancel Rate = MIN (Desired Vacancy Cancel Rate, Maximum Vacancy Cancel Rate)

Desired Vacancy Cancellation Rate = MAX (0, - Desired Vacancy Creation Rate)

(20) (21) (22) (23)

8 Vacancies comprise the demand for new workers that have been placed but whose positions have not yet been filled.


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