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Slide 4.1
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Chapter 4Tourism Demand Determinants
and Forecasting
Slide 4.2
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
This Lecture will give you
1. Familiarity with the determinants of demand which, at an individual level, are likely to affect propensity to travel;
2. An understanding of social, technological, economic and political influences on tourism demand;
3. An awareness of the reasons for forecasting demand for tourism;
4. An understanding of the major approaches to forecasting demand for tourism; and
5. An appreciation and explanation of the key historic and regional patterns of demand for tourism.
Slide 4.3
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Determinants of Tourism Demand at the Individual Scale
Determinants of demand – These are the parameters of travel possibility for the individual. They can be categorized into two groups. First group is lifestyle factors, while second group is known as life-cycle determinants. These factors are interrelated and complementary
A) Lifestyle determinants:– Income and employment– Paid holiday entitlement– Education and mobility– Race and gender
Slide 4.4
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Income and employmentIncome and employment
• These factors have an influence upon both the level and the nature of tourism demand.
• Gross income gives little indication of the money available to spend on tourism.
• The relationship between income and tourism is a complex one.
• Certain tourism activities are highly sensitive to income-such as skiing holidays while others insensitive to income changes –i.e. religious and business tourism.
• As discretionary income rises, the ability to partake (participate) as tourism is associated with the purchase of leisure oriented goods, travel may reach a peak.
Slide 4.5
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Paid holiday entitlementPaid holiday entitlementss• The increase in leisure time experienced by most
individuals in the developed world since 1950 is very substantial.
• In the developed western economies, individuals have anything from 35 to 50 hours free time a week at their disposal.
• Patterns of leisure time have changed over the past 20 years to allow three-day weekends , flexi time and longer periods of absence for those in employment
• Individual levels of paid holiday entitlement would seem to be an obvious determinant of travel propensity.
• The pattern of entitlement is also responsible in part for seasonality of tourism in some destinations.
Slide 4.6
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Education and mobilityEducation and mobility• The better educated the individual, the higher
the awareness of travel opportunities and susceptibility to information, media, advertising and sales promotion.
• Personel mobility has also an important influence on travel propensity especially with regard to domestic travels.
• The car is dominant recreational tool for both international and domestic tourism
• Ownership of car stimulates travel for pleasure.
Slide 4.7
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Race and genderRace and gender
• These are two critical determinants of tourism demand
• Most surveys indicated that whites and males are the highest levels of effective demand for tourism.
• However changes in society acting to complicate this rather simplistic view.
• For example in Japan, office ladies are important consumers for travel.
Slide 4.8
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Determinants of TourismDeterminants of TourismDemand at the Individual Scale (1Demand at the Individual Scale (1))
• Life cycle determinants can be thought of as either ‘chronological age’ or ‘domestic age’. Domestic age is a powerful travel determinant. The propensity to travel is closely related to an individuals age.
• Life cycle determinants: Domestic age refers to stage in the life-cycle reached by an individual, and different stages are caracterised by distinctive holiday demand and levels of travel propensity. Each stage of the life cycle has:– Preoccupations; mental absorptions from motivations– Interests; feelings of what an individual would like to do – Activities; actions of an individual
Slide 4.9
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Determinants of TourismDemand at the Individual Scale (2)
Life cycle determinants: Domestic age
The stages of the domestic life cycle are:– Childhood– Young adult/adolescence– Marriage– Empty nest– Old age
Slide 4.10
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Figure 4.1 Traditional leisure paradox
Slide 4.11
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Suppressed DemandCauses of suppressed demand include:
• Travel Cost; tourism competes with other products for available funds
• Lack of time; is a problem for some individuals who cannot allocate sufficient time to travel
• Ill health or handicap; is a physical limitation for many people.
• Family circumstance; single parents or who have to care for elderly relatives cannot participate to travel
• Government restrictions or security issues; are the currency controls and visa requirements
• Lack of interest; such as fear to fly by airplane
Slide 4.12
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Determinants of Demandat the Macro Scale
• Social Factors – include determinants such as population density, growth and distribution
• Technological factors – include determinants such as IT, transport and leisure technology
• Economic factors – include determinants such as level of development
• Political factors – include factors such as government involvement, subsidy and prohibition of travel.
Slide 4.13
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Table 4.1 The major determinants of tourism demandSource: Ulysal, M. (1998) ‘The determinants of tourism demand: a theoretical perspective’, pp. 79–98 in D. Ioannides and K. Debbage (eds) The Economic Geography of the Tourist Industry, London, Routledge
Slide 4.14
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
The DemographicTransition and Tourism
The phases of the demographic transition are:
• The high stationary(stable) phase
• The early expanding phase
• The late expanding phase
• The low stationary phase
Slide 4.15
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Table 4.2 Economic development and tourisma Countries that are members of the Organization of Petroleum Exporting Countries (OPEC) are a notable exception in these regions.
Source: Boniface and Cooper 1987, adapted from Rostow, 1959
Slide 4.16
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Table 4.2 Economic development and tourism (cont’d)b Centrally planned economies merit a special classification, although most are at the drive to maturity stage.
Source: Boniface and Cooper 1987, adapted from Rostow, 1959
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Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Forecasting Tourism Demand
Quantitative techniques:
• Causative models• Non-causative models
Qualitative techniques:
• The Delphi technique• Scenario writing
Slide 4.18
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Causative models• These models attempt to predict changes in the
variables that cause tourism demand and to analyse the relationship between those vaiables and demand.
• The most well known of these approaches is econometric modelling, commonly using multiple regression.
• The advantage of this approach is that it allows to understand the underlying causes of demand and to forecast how these will change in future.
• It also allows us to ask “what if” questions to see how demand will change under a set of circumstances.
Slide 4.19
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Non-causative ModelsNon-causative Models
• These models are often known as time series time series modelsmodels . Essentially they rely on extrapolating future trends from the past and use techniques .
• While these models can be critisized as inappropriate for a volatile industry such as tourism where past situations may not carry forward into the future, they do deliver surprisingly accurate forecasts.
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Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Qualitative ApproachesQualitative Approaches
• These approaches are mainly used to product long term trends, or to examine specific scenarios in the future such as environmental or technological influences or the likely impact of new product.
• While there are a number of techniques available, the most common ones are the DELPHI technique and SCENARIO writing.
Slide 4.21
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
DELPHIDELPHI technique• This technique relies upon a panel of experts to deliver
a concensus view of the future.• The panel is selected according to their expertise and a
questionnaire is compiled relating to the particular future trend or forecast required.
• Once the panel members have completed the questionnaire, results are combined and circulated to the panel to give them chance to change their views
• This process then goes through a number of iterations (repetitions), often three or four, before a concensus forecast is reached...
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Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Figure 4.3 The Delphi processSource: Witt and Martin, 1989
Slide 4.23
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Scenario Writing• This is not only a technique to forecast future
demand, but also an approach that clarifies the issues involved.
• It relies upon creating alternative hypothetical futures relating to particular “states” or sets of circumstances that will impact upon demand in the future.
• The steps are; 1) Baseline analysis, 2) A future scenario and 3) A future path for the future scenario.
Slide 4.24
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
World Patterns ofTourism Demand
The regional pattern:
• Europe and the Americas have dominated world tourism in past decades.
• However, in the future, growth will be in East Asia and the Pacific.
Slide 4.25
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Issue in ForecastingTourism Demand
Issues in forecasting tourism demand include:• Accuracy – relates to the time horizon, and the
purpose of the forecast• Data – availability of good data is an issue in
tourism• Variables outside the control of tourism – these are
difficult to forecast• Identifying and quantifying variables – this is a
real issue; for example how do you quantify promotion?
Slide 4.26
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
World Patterns ofTourism Demand
The historical pattern.• Since the second world war each decade has
been characterised by particular influences on demand:– 1980s: continued growth despite some setbacks
– 1990s: slowing growth
– 2000s: the challenges of the new millennium – ‘911’, Bali and the Iraq War leading to a ‘new normality’.
Slide 4.27
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Table 4.9 International tourism trends: arrivals and receipts worldwide,1950–2002
Source: WTO, annual
Slide 4.28
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Table 4.10 Regional share of international tourism, 1950–2000Source: Based on WTO data, annual
Slide 4.29
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Table 4.10 Regional share of international tourism, 1950–2000 (cont’d)Source: Based on WTO data, annual
Slide 4.30
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
World Patterns ofWorld Patterns ofTourism DemandTourism Demand
Generating markets for tourism to a country depend on:
• The leading generators in the world• Neighbouring countries and their population• Access and border facilitation• Price• Marketing• Historic links• Attractiveness of the country
Slide 4.31
Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors
Conclusions
• Determinants are important and all interrelated• Determinants mean that tourism is concentrated in
the developed countries of the world• As a service industry tourism is vulnerable to
changes in demand - this means that demand forecasting techniques are important
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