Tourism and Hotel economics Tourism and Hotel economics THM102THM102

week 7week 7

Title: Title: Introduction to TourismIntroduction 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 DEMANDTOURISM DEMAND

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

APPROACHES TO STUDY APPROACHES TO STUDY TOURISM DEMAND TOURISM DEMAND

Economists-Economists- Tourism demand is Tourism demand is measured in monetary returns gained measured in monetary returns gained within a period of time. Price, elasticity, within a period of time. Price, elasticity, quality. Revenue and Expenditurequality. Revenue and Expenditure

Psychologists-Psychologists- Demand relates to Demand relates to motivation and behavior, personality, motivation and behavior, personality, environmentenvironment

Geographers-Geographers- Demand based on Demand based on geographic boundaries, demographics.geographic boundaries, demographics.

TYPES OF DEMANDTYPES OF DEMAND

Effective or Actual Demand-Effective or Actual Demand- People People actually traveling at a point of time.actually traveling at a point of time.

Potential Demand-Potential Demand- People who could People who could travel if motivatedtravel if motivated

Deferred/Postponed Demand-Deferred/Postponed Demand- People People who wish to travel, but are not who wish to travel, but are not traveling presently due to temporary traveling presently due to temporary reasons, of self or supply endreasons, of self or supply end

Suppressed Demand –Suppressed Demand – People not People not interested in travel interested in travel

CONCEPTS RELATED TO CONCEPTS RELATED TO DEMANDDEMAND

Demand Substitution-Demand Substitution- Demand Demand for one activity is substituted by for one activity is substituted by another. E.g. Camping to leisure another. E.g. Camping to leisure cruisecruise

Demand Redirection-Demand Redirection- Demand Demand redirected to another product. redirected to another product. Spain to greeceSpain to greece

Demand Generation-Demand Generation- Creation of Creation of new demand on creation of new new demand on creation of new productsproducts

TRAVEL PROPENSITY – TRAVEL PROPENSITY – LIKELIHOOD TO TRAVEL LIKELIHOOD TO TRAVEL

Net Travel Propensity-Net Travel Propensity- Percentage of Percentage of population of the overall population who population of the overall population who makes at least one trip during a given makes at least one trip during a given period of time. period of time.

= = Number of population taking at least one trip Number of population taking at least one trip X 100X 100total populationtotal population

Gross Travel Propensity-Gross Travel Propensity- Total number of trips Total number of trips undertaken as a percentage of the population.undertaken as a percentage of the population.

= = Number of Total TripsNumber of Total Trips X100 X100

Total PopulationTotal Population

TRAVEL FREQUENCYTRAVEL FREQUENCY

Travel Frequency =Travel Frequency = Gross Travel PropensityGross Travel Propensity

Net Travel PropensityNet Travel Propensity Country Potential Generation Index (CPGI)Country Potential Generation Index (CPGI)

CPGI = CPGI = Ne/NwNe/Nw Pe/PwPe/Pw

Ne = Number of trips generated by country Ne = Number of trips generated by country Nw = Number of trips generated in the Nw = Number of trips generated in the

worldworld Pe = Population of the countryPe = Population of the country Pw = Population of the worldPw = Population of the world

HIGH AND LOW TRAVEL HIGH AND LOW TRAVEL PROPENCITYPROPENCITY

High Travel PropensityHigh Travel PropensityHigh EducationHigh EducationMore AwarenessMore AwarenessMore IncomeMore IncomePrivate VehiclePrivate VehicleBetter Travel Better Travel FacilitationFacilitationGood Exchange RateGood Exchange RateShorter Travel Shorter Travel DistanceDistanceLow Travel CostLow Travel CostYoung AgeYoung Age

Low Travel Low Travel PropensityPropensityLow EducationLow EducationLow AwarenessLow AwarenessLow IncomeLow IncomeNo ownership of No ownership of VehicleVehiclePoor Travel FacilitationPoor Travel FacilitationPoor Exchange RatePoor Exchange RateLong Travel DistanceLong Travel DistanceHigh Travel CostHigh Travel CostOld AgeOld Age

FACTORS DETERMINING FACTORS DETERMINING TOURISM DEMANDTOURISM DEMAND

1.1. IndividualIndividual

2.2. EconomicEconomic

3.3. GeographicGeographic

4.4. DestinationDestination

INDIVIDUAL FACTORSINDIVIDUAL FACTORS

EducatEducation and Awarenession and Awareness MobilityMobility Age, Gender, ReligionAge, Gender, Religion Income and employment, disposable Income and employment, disposable

income, household income, DINKSincome, household income, DINKS Paid holidayPaid holiday Family InfluenceFamily Influence Nature of Family-joint, nuclearNature of Family-joint, nuclear VALSVALS Stage of Family Life CycleStage of Family Life Cycle Gap Year OpportunitiesGap Year Opportunities

ECONOMIC FACTORSECONOMIC FACTORS

Cost of TravelCost of TravelCost of ProductsCost of ProductsCompetitive PricesCompetitive PricesExchange RateExchange Rate

GEOGRAPHIC FACTORSGEOGRAPHIC FACTORS

SeasonalitySeasonalityAccessibility, location and Accessibility, location and

distancedistanceAttractions AvailableAttractions AvailableUrban or Rural population or Urban or Rural population or

Economy Economy

DESTINATION FACTORSDESTINATION FACTORS

Image – organic and inducedImage – organic and induced Promotion: travel channels, Promotion: travel channels,

awareness, dealsawareness, deals Technology and developmentTechnology and development CRS technologyCRS technology Development LevelDevelopment Level CredibilityCredibility Safety and Security Safety and Security Attraction and EventsAttraction and Events Quality of ProductQuality of Product Travel FormalitiesTravel Formalities

POLITICAL FACTORSPOLITICAL FACTORS

Government regulation on Government regulation on supply and touristssupply and tourists

Visas, formalities, health checks, Visas, formalities, health checks, currency, prohibitionscurrency, prohibitions

Transport regulation, Transport regulation, accessibility, bilateral accessibility, bilateral agreementsagreements

CHARACTERISTICS OF TOURISM CHARACTERISTICS OF TOURISM DEMANDDEMAND

planned demandplanned demand Involves a lot of expenditureInvolves a lot of expenditure There is no tangible return or There is no tangible return or

purchasepurchase Highly price elasticHighly price elastic Can be price inelastic tooCan be price inelastic too SeasonalitySeasonality Is not subject to law of diminishing Is not subject to law of diminishing

returnsreturns Changing demand patterns Changing demand patterns

MEASUREMENT OF TOURISM MEASUREMENT OF TOURISM DEMANDDEMAND

Household SurveysHousehold SurveysEn route SurveysEn route SurveysDestination SurveysDestination SurveysSurveys of SuppliersSurveys of Suppliers

COMPONENTS OF TOURISM COMPONENTS OF TOURISM SUPPLYSUPPLY

InfrastructureInfrastructureSuperstructureSuperstructureAttractionsAttractionsMarketing/Promotion and Destination Marketing/Promotion and Destination

ImageImage

Tourism Supply includes TOP and Tourism Supply includes TOP and ROPROP

FACTORS AFFECTING TOURISM FACTORS AFFECTING TOURISM SUPPLYSUPPLY

1.1. Economic Economic

2.2. PoliticalPolitical

3.3. GeographicalGeographical

4.4. LegalLegal

5.5. TechnologicalTechnological

6.6. SocialSocial

DEMAND-SUPPLY LINKDEMAND-SUPPLY LINK

Demand Generating Origin

Supply ReceivingDestination

Marketing and Promotion

TYPES and FORMS of TOURISMTYPES and FORMS of TOURISMTYPESTYPES

1. Political Boundary1. Political Boundary National/Domestic/IntraNational/Domestic/Intra InternationalInternational RegionalRegional

2. Distance Travelers2. Distance Travelers Long HaulLong Haul Short HaulShort Haul

3. Direction3. Direction InboundInbound OutboundOutbound

4. Pattern of Level4. Pattern of Level FITFIT GITGIT

5. Interest5. Interest Mass/ ConventionalMass/ Conventional Alternate Alternate

FORMSFORMS HistoricalHistorical CulturalCultural Religious/PilgrimageReligious/Pilgrimage EducationalEducational SportsSports HeritageHeritage YouthYouth EntertainmentEntertainment ShoppingShopping PoliticalPolitical SocialSocial SociologicalSociological Medical/HealthMedical/Health RelaxationRelaxation EthnicEthnic AdventureAdventure

TYPES and FORMS of TYPES and FORMS of TOURISMTOURISM

TYPESTYPES

6. Planning6. Planning RuralRural UrbanUrban

7. Location7. Location Mountain, Beach, Desert, City, Mountain, Beach, Desert, City, SpaceSpace

8. Time8. Time SeasonalSeasonal Year roundYear round

FORMSFORMS Nature/ wildlifeNature/ wildlife Business/ ConventionBusiness/ Convention

Possible Exam QuestionsPossible 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