As a multifaceted economic activity, tourism plays a crucial role in regional development by increasing income levels, stimulating investment, and generating employment through strong multiplier effects across related sectors. In this context, the hotel industry constitutes a central element of local tourism economies, as hotel revenues are directly influenced by tourism demand. This study examines the relationship between tourism demand and hotel revenues in Mingachevir, Azerbaijan, with a particular focus on the comparative effects of domestic and foreign overnight stays. Annual data from official statistical sources are analyzed using the Autoregressive Distributed Lag (ARDL) approach and Fully Modified Ordinary Least Squares (FMOLS) estimation techniques. The ARDL bounds test indicates a statistically significant long-run cointegration relationship among hotel revenues, domestic overnight stays, and foreign overnight stays. The error correction term is negative and significant, confirming convergence toward long-run equilibrium. FMOLS results show that both domestic and foreign tourism positively affect hotel revenues; however, domestic tourism has a substantially stronger impact. Specifically, a 1% increase in domestic overnight stays leads to an approximate 2.98% rise in hotel revenues, compared to 0.50% for foreign overnight stays. These findings underscore the dominant role of domestic tourism in shaping hotel performance and provide policy-relevant implications for regional tourism development and revenue optimization strategies.

Keywords: tourism demand, hotel revenues, domestic tourism, foreign tourism, ARDL, FMOLS, Mingachevir

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