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Lecture Tourism: Principles, practices, philosophies (12th edition): Chapter 13 - Charles R. Goeldner, J. R. Brent Ritchie

Chapter 13 - Measuring and forecasting demand. Economists defi ne demand as a schedule of the amount of any product or service that people are willing and able to buy at each specifi c price in a set of possible prices during some specifi ed period of time. Thus there exists at any one time a defi nite relationship between the market price and the quantity demanded. | Measuring and Forecasting Demand 13 LEARNING OBJECTIVES Understand the concept of demand and its application and importance in tourism development planning. Understand the factors determining the magnitude and fluctuations of demand. Become able to apply various methods to measure and forecast demand. VITAL DEMAND DATA Number of visitors Means of transportation used by visitors to arrive at destination Length of stay and type of accommodations used Amount of money spent by visitors Demand for travel to a particular destination is a function of the propensity of the individual to travel and the reciprocal of the resistance of the link between origin and destination areas D(emand)= f (propensity, resistance) Propensity depends on: Psychographics Demographics (socioeconomic status) Marketing effectiveness Resistance depends on: Economic distance Cultural distance Cost of tourist services Quality of service Seasonality DEMAND TO A DESTINATION MEASURES OF ACTUAL DEMAND Visitor arrivals Number of people arriving at a destination who stay for 24 hours or longer Visitor - days or - nights = no. of visitors × avg. no. of days or nights at destination Amount spent = no. of visitor - days or – nights × avg. expenditure per day/night PROJECTION METHODOLOGY Several statistical methods or econometric analysis can be used to project demand: Trend analysis method Simple Regression: Linear least square method Multiple Regression: Linear least squares method Computer simulations and models Executive Judgment (Delphi) method ECONOMIC DISTANCE Economic distance relates to time/cost involved in traveling from origin to destination and back The higher the economic distance, the higher the resistance for that destination and, consequently, the lower the demand Conversely, between any origin and destination point, if travel time or cost can be reduced, demand will increase Excellent examples include: introduction of jet plane in 1959 introduction of wide - bodied jets in the late 1960s Jets cut travel time between California and Hawaii from 12 hours to 5; demand grew dramatically A similar surge was experienced with the introduction of wide-bodied planes for transatlantic flight, which cut travel cost by almost 50% between the US and most countries on the European continent CULTURAL DISTANCE Cultural distance refers to the extent to which the culture of the area from which the tourist originates differs from the culture of the host region. In general, the greater the cultural distance, the greater will be the resistance. In some cases, the relationship might be the opposite. For example, the higher the cultural distance between particular origin and destination areas, the more an allocentric person may wish to travel to that destination, to experience this extreme difference.