Short-Run Adjustment Mechanisms in Event-Driven Tourism Demand: Evidence from Hotels in Ayodhya

Abstract

Government-sponsored mega cultural events are increasingly promoted as instruments for tourism-led economic development, particularly in heritage and pilgrimage destinations. While such events often generate substantial short-term revenue gains, their implications for employment and operational adjustment in the hospitality sector remain underexplored. This study examines how accommodation providers respond to event-driven demand shocks using primary data collected from 102 hotels and homestays operating in Ayodhya during a major cultural event organized by the Uttar Pradesh government.

Employing a combination of descriptive analysis, logistic regression, and ordinary least squares estimation, the study investigates labour adjustment, occupancy-based capacity utilisation, and pricing strategies. The results indicate that despite significant revenue growth during the event period, accommodation providers did not proportionally expand employment, reflecting the presence of short-run labour rigidity. Instead, increased demand was primarily absorbed through higher occupancy levels and substantial room rate adjustments. Price-based responses were particularly pronounced among premium establishments, highlighting heterogeneity in adjustment strategies across capacity types.

The findings suggest that mega cultural events generate economic benefits largely through intensified utilisation of existing capacity rather than through short-term job creation. From a policy perspective, the results underscore the need for complementary labour and capacity planning measures to ensure that event-led tourism development is both sustainable and inclusive.