Slide 4.1 Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors Tourism Demand Determinants and Forecasting Chapter 4 Tourism 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 determinants of demand individual level 1.Familiarity with the determinants of demand which, at an individual level, are likely to affect propensity to travel; social, technological, economic and political influences 2.An understanding of social, technological, economic and political influences on tourism demand; reasons for forecasting demand 3.An awareness of the reasons for forecasting demand for tourism; major approaches 4.An understanding of the major approaches to forecasting demand for tourism; and key historic and regional patterns 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 life-cycle determinants. 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 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.

Slide 4.5 Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors Income and employment 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 4.6 Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors Paid holiday entitlements 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.

Slide 4.7 Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors Paid holiday entitlements 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 4.8 Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors Education 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 4.9 Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors Race 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 4.10 Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors Determinants of Tourism Demand 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.

Slide 4.11 Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors Life cycle determinants: 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 4.12 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 Tourism Demand 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 4.13 Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors Consumer Life cycle stages

Slide 4.14 Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors

Slide 4.15 Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors Figure 4.1 Traditional leisure paradox

Slide 4.16 Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors Suppressed Demand Causes 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.

Slide 4.17 Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors Suppressed Demand Family circumstanceFamily circumstance; single parents or who have to care for elderly relatives cannot participate to travel Government restrictions or securityGovernment restrictions or security issues; are the currency controls and visa requirements Lack of interestLack of interest; such as fear to fly by airplane

Slide 4.18 Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors Determinants of Demand at the Macro Sca Determinants of Demand at 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 4.19 Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors Table 4.1 The major determinants of tourism demand

Slide 4.20 Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors The Demographic Transition 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 4.21 Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors Table 4.2 Economic development and tourism

Slide 4.22 Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors Table 4.2 Economic development and tourism (cont’d)

Slide 4.23 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 4.24 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.

Slide 4.25 Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors Causative models 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 4.26 Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors Non-causative Models time series modelsThese models are often known as time series models. 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.

Slide 4.27 Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors Qualitative 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 4.28 Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors DELPHI DELPHI 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.

Slide 4.29 Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors DELPHI DELPHI technique 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...

Slide 4.30 Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors Figure 4.3 The Delphi process

Slide 4.31 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 4.32 Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors World Patterns of Tourism 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 4.33 Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors Issue in Forecasting Tourism 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 4.34 Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors World Patterns of Tourism 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 4.35 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

Slide 4.36 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

Slide 4.37 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 4.38 Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors World Patterns of Tourism 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 4.39 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

Slide 4.40 Cooper et al: Tourism: Principles and Practice, 3e Pearson Education Limited 2005, © retained by authors End of Chapter Slides