Tourism Economics

This paper deals with the analysis of seasonality in the context of tourism time series. The authors present a general testing procedure that permits them to consider the cases of deterministic and/or stochastic (with integer and fractional differentiation) seasonality in a unified treatment. The procedure is applied to four Spanish tourism time series: the total (foreign and domestic) number of tourists, the number of domestic tourists, the number of nights spent in hotel accommodation by tourists, and the number of nights spent in hotel accommodation by domestic tourists. The results show that the series can be well described in terms of seasonally fractionally integrated models, with the orders of integration ranging between 0.4 and 0.6 in the case of white noise disturbances, and values slightly smaller with autocorrelated disturbances. Thus the standard practice of taking seasonal dummies (deterministic seasonality) or integer differentiation (seasonal unit roots) may lead to erroneous conclusions about the stochastic behaviour of the series. Moreover, the series seem to be mean reverting, implying that shocks affecting them disappear in the long run though at a very slow hyperbolic rate.

The authors use the non-parametric method proposed by Harding and Pagan (2003) to date tourism growth cycles. This study is among the first to use robust, transparent and replicable dating rules in the context of economic tourism activity cycles. On the basis of a cycle indicator function, the authors are able to establish a greater degree of cycle synchronization of tourism demand than that observed at the economic cycle level, and, by means of a recursive correlation coefficient, they conclude that this degree of cycle synchronization has increased over the years. To analyse the presence of a time lag between turning points of economic cycles and tourism demand, they suggest a lag concordance index. Observing cycles and producing dating indicator functions are important in examining potential asymmetric behaviour associated with tourism economic phases and are useful for forecasting purposes.

This paper presents an empirical study of tourism demand dynamics and identifies areas in which the scrutiny of relationships between theoretical and empirical considerations is likely to produce new insights. A flexible general form of a Dynamic Almost Ideal Demand System (DAIDS) is derived to analyse UK tourism demand for the neighbouring destinations of Portugal, Spain and France during 1969–97. Nested within the general dynamic structure are Deaton and Muellbauer's static AIDS model itself, the partial adjustment model and the auto-regressive distributed lag model, which are tested against the general dynamic alternative. The empirical results obtained show that DAIDS is a data-coherent and theoretically consistent model, providing evidence of the robustness of this methodology for tourism demand analysis in a temporal context. Moreover, the dynamic model offers statistically strong evidence of the inadequacy of the orthodox static AIDS and other restricted models for the consistent reconciliation of data and theory within their formulations. Estimates for tourism price and expenditure elasticities are obtained, permitting a comparative analysis of the relative magnitudes and statistical relevance of the long-run and short-run sensitivity of UK tourism demand to changes in its determinants.

Algarve is a tourism region in the south of Portugal. This paper develops and empirically validates a second-order factor analysis model to assess the overall image of Algarve held by tourists who visit it. The data are based on the opinions of a random convenience sample of tourists taken at Faro Airport. It is found that the observable variables define three first-order factors – that is, three image factors – and these are used as indicators of a unique second-order factor, which is the overall image held by tourists to Algarve. The main conclusion of the paper is that the ‘sun and sand’ factor is the most important determinant of tourists' overall image of the region.

This paper investigates if and to what extent socio-demographics and travel-related variables determine the individual daily and individual overall expenditure levels of tourists staying in rural areas of North Portugal. This analysis may help to increase understanding of the role that particular tourist segments and travel contexts play in enhancing the economic development of such areas. The results point to the relevance of variables such as age, domestic versus international markets, duration of stay and diverse benefits sought. The implications for destination marketing are discussed, as are further sustainability goals for tourism development in rural areas.

This paper is about quality decisions in a vertical structure, in which competitive producers sell to ‘powerful retailers’. Specifically, the analysis focuses on the role played by the tour operator (TO) in quality investments when distributing the capacity of a given tourism destination. The authors emphasize the presence of quality externalities among hotel establishments, and find that TO distribution can sometimes provide a solution to the ‘tragedy of the commons’ in quality provision. Thus they assess the implications of vertical relationships for quality in the hotel industry and derive appropriate policy recommendations.