Tourism and Hotel economics THM102 week 7 Title: Introduction to Tourism

Learning Objectives: TOURISM DEMAND & SUPPLY Be able to define demand and supply Understand the different approaches to demand Explain the concepts for supply and demand Describe the propensity of Travel Be able to explain the four factors which determine travel Consider the characteristics and measurement of demand Outline the components of supply Be able to briefly describe the six factors of supply Appreciate the link between supply and demand Types and forms of Travel Possible Exam questions

TOURISM DEMAND Mathieson and Well (1982) – The total number of persons who travel, or wish to travel, to use tourists facilities and services at places away from their places of work or residence

APPROACHES TO STUDY TOURISM DEMAND Economists- Tourism demand is measured in monetary returns gained within a period of time. Price, elasticity, quality. Revenue and Expenditure Psychologists- Demand relates to motivation and behavior, personality, environment Geographers- Demand based on geographic boundaries, demographics.

TYPES OF DEMAND Effective or Actual Demand- People actually traveling at a point of time. Potential Demand- People who could travel if motivated Deferred/Postponed Demand- People who wish to travel, but are not traveling presently due to temporary reasons, of self or supply end Suppressed Demand – People not interested in travel

CONCEPTS RELATED TO DEMAND Demand Substitution- Demand for one activity is substituted by another. E.g. Camping to leisure cruise Demand Redirection- Demand redirected to another product. Spain to greece Demand Generation- Creation of new demand on creation of new products

TRAVEL PROPENSITY – LIKELIHOOD TO TRAVEL Net Travel Propensity- Percentage of population of the overall population who makes at least one trip during a given period of time. = Number of population taking at least one trip X 100 total population Gross Travel Propensity- Total number of trips undertaken as a percentage of the population. = Number of Total Trips X100 Total Population

TRAVEL FREQUENCY Travel Frequency = Gross Travel Propensity Net Travel Propensity Country Potential Generation Index (CPGI) CPGI = Ne/Nw Pe/Pw Ne = Number of trips generated by country Nw = Number of trips generated in the world Pe = Population of the country Pw = Population of the world

HIGH AND LOW TRAVEL PROPENCITY High Travel Propensity High Education More Awareness More Income Private Vehicle Better Travel Facilitation Good Exchange Rate Shorter Travel Distance Low Travel Cost Young Age Low Travel Propensity Low Education Low Awareness Low Income No ownership of Vehicle Poor Travel Facilitation Poor Exchange Rate Long Travel Distance High Travel Cost Old Age

FACTORS DETERMINING TOURISM DEMAND Individual Economic Geographic Destination

INDIVIDUAL FACTORS Education and Awareness Mobility Age, Gender, Religion Income and employment, disposable income, household income, DINKS Paid holiday Family Influence Nature of Family-joint, nuclear VALS Stage of Family Life Cycle Gap Year Opportunities

ECONOMIC FACTORS Cost of Travel Cost of Products Competitive Prices Exchange Rate

GEOGRAPHIC FACTORS Seasonality Accessibility, location and distance Attractions Available Urban or Rural population or Economy

DESTINATION FACTORS Image – organic and induced Promotion: travel channels, awareness, deals Technology and development CRS technology Development Level Credibility Safety and Security Attraction and Events Quality of Product Travel Formalities

POLITICAL FACTORS Government regulation on supply and tourists Visas, formalities, health checks, currency, prohibitions Transport regulation, accessibility, bilateral agreements

CHARACTERISTICS OF TOURISM DEMAND planned demand Involves a lot of expenditure There is no tangible return or purchase Highly price elastic Can be price inelastic too Seasonality Is not subject to law of diminishing returns Changing demand patterns

MEASUREMENT OF TOURISM DEMAND Household Surveys En route Surveys Destination Surveys Surveys of Suppliers

COMPONENTS OF TOURISM SUPPLY Infrastructure Superstructure Attractions Marketing/Promotion and Destination Image Tourism Supply includes TOP and ROP

FACTORS AFFECTING TOURISM SUPPLY Economic Political Geographical Legal Technological Social

DEMAND-SUPPLY LINK Demand Supply Receiving Generating Origin Destination Marketing and Promotion

TYPES and FORMS of TOURISM 1. Political Boundary National/Domestic/Intra International Regional 2. Distance Travelers Long Haul Short Haul 3. Direction Inbound Outbound 4. Pattern of Level FIT GIT 5. Interest Mass/ Conventional Alternate FORMS Historical Cultural Religious/Pilgrimage Educational Sports Heritage Youth Entertainment Shopping Political Social Sociological Medical/Health Relaxation Ethnic Adventure

TYPES and FORMS of TOURISM 6. Planning Rural Urban 7. Location Mountain, Beach, Desert, City, Space 8. Time Seasonal Year round FORMS Nature/ wildlife Business/ Convention

Possible Exam Questions Define demand Outline the different approaches to demand Explain the concepts for demand Describe the propensity of Travel Explain in detail the four factors which determine travel Describe the characteristics of demand Outline the components of supply Briefly describe the six factors of supply Explain the link between supply and demand Outline the types and forms of Travel