Due to its international character and the strong Swiss franc appreciation during the last years, exchange rate fluctuations have become increasingly important for the Swiss hotel industry. However, little is known about the exchange rate risk exposure and management of small, non-listed service providers. This paper develops a conceptual framework describing the factors affecting the exchange rate exposure of hotels and the role exchange rate risk management plays in mitigating the exposure. Based on multiple case studies, the paper investigates Swiss hotels’ current exchange rate risk exposure and management and thereby illustrates the conceptual framework. It finds that a hotel’s guest structure is the key factor explaining its exchange rate exposure. The study further finds that even though the exchange rate exposure is reported to be substantial for most hotels, their exposure is barely hedged. Primary reason for this is the lack of a professional exchange rate risk management. Considerable potential in improving the hotels’ exchange rate risk management is revealed. Based on this potential the paper suggests a variety of strategies and implications for the hotels to enhance their competitiveness.
