Tourism Economics

Within a context of uncertainty over travellers' security, tourism experienced two critical events in 2003 – the Iraq War and SARS. This paper explores the economic effects of the tourism crisis on Australia. While the events resulted in less inbound tourism, they also resulted in a reduction of outbound tourism. The net economic impacts on the nation depend on the extent to which cancelled or postponed outbound travel are allocated to savings, domestic tourism or the purchases of other goods and services. Using a computable general equilibrium model of the Australian economy, simulations of the impacts of the events suggest that the net effects are not as severe as might have been perceived by tourism stakeholders.

The objective of this study is to quantify the long-term effects of advertising on tourism demand. A single equation demand model is specified which includes advertising as an explanatory variable along with other economic determinants of demand, prices and incomes. Using the Phillip–Hanson procedure, long-run elasticities of demand are estimated for Australian tourism from its major markets – Japan, New Zealand, the UK and the USA. The results indicate that Japanese and New Zealand tourists are more responsive to advertising than UK and US tourists and that they are also highly sensitive to prices compared with UK and US tourists.

Tourism is an important contributor to the Australian economy. The tourism sector's ability to continue its role in the national economy depends on the provision of investment funds necessary to create and maintain tourism businesses and tourism-related infrastructure. Based on national accounts data, the present study analyses tourism investment performance in Australia over the last 13 years. It reveals that the tourism sector experienced a lower rate of return than the rest of the economy during this period in spite of the fact that the tourism investment rate was consistently higher. It also reveals that, within the broad tourism sector, there is substantial variation in investment performance and profitability. Caution must be exercised in interpreting these findings, as there are substantial gaps and limitations, in both the definition and the measurement of tourism investment and related variables. Future work in this area should focus on closely specifying requirements for a properly defined and sufficiently disaggregated dataset on tourism investment and related variables.

This paper reviews the development of Australia's hotel sector over a 15-year period and uses that analysis as the basis for suggesting the likely shape of future developments. The underlying dynamics of hotel development and subsequent performance are shown to reflect a continuing pattern of boom and bust. The late 1980s were characterized by a building boom in the lead-up to the Bicentennial and World Expo celebrations. This was soon followed by a bust during the recession of the early 1990s. In the lead-up to the 2000 Olympics, another building boom occurred, particularly in Sydney, leading to a predictable oversupply of rooms and subsequent stalling of construction during 2003. A change has been evident among developers, who are moving away from their view of hotels as a component of commercial property development towards a stronger connection between inner-city residential apartment developments and hotels.

This paper examines the structure, trends and magnitudes of tourism taxes in Australia. Of the two types of broad taxes, general and special, the former accounts for the largest portion of the total tax revenue: excise duties have been the single major contributor, accounting for more than half of the tax revenue in the 1990s. Following the tax reforms in 2000, the Goods and Services Tax (GST) became the major contributor to tax revenue. A comparison of estimated tourism taxes with comparable sectors indicates that the tourism sector overwhelmingly makes a high contribution to national tax revenue. Similarly, while tax revenue from the all sectors has grown over time, an above-average growth in the tourism taxes is evident, particularly since the introduction of the GST. In conclusion, the Australian tourism sector appears to bear a relatively high tax burden and the burden is rising. The GST, an important element of the tax reforms of 2000, seems to have imposed a disproportionately heavy tax burden on the tourism sector.

The forecasting of international tourist arrivals is normally done on a per country basis. The volume of tourist flow varies widely among countries, largely depending on their population size but also on their openness to tourism. This paper uses data for Austria, China (PRC), Canada, the Cook Islands, Cyprus, Japan, the Maldives, Malta, New Zealand, Singapore, Slovenia and Thailand over a quarterly estimation period from 1995 to 1999 to forecast ahead for 2000 to 2002. In addition, the total arrivals to Japan from 24 different countries of origin are also examined with the same estimation and forecast periods. The topic explored is whether it is possible to examine the structure of the time-series data to determine why particular forecasting is more or less accurate. As a starting point, forecasts are obtained from larger data volumes relative to smaller volumes. The forecasting comparison uses the short-term time series methods of the basic structural model and the Holt–Winters model, with a comparison for base accuracy against the naïve model. The results show in the forecasting comparison that the volume of flow and volatility and seasonality do not directly influence the accuracy of the forecast.

The degree of capacity utilization affects the measurement of total productivity. This paper uses establishment occupancy level as a proxy for establishment capacity utilization. Accordingly, the authors decompose total factor productivity (TFP) growth into technical progress, changes in allocative efficiency, changes in occupancy levels, changes in technical efficiency and scale effects. The empirical results show that the occupancy level component offers the most important contribution to TFP. Policy implications are offered in light of the results.

There is increasing interest in arranging festivals or special events in many cities. This paper presents an econometric model to account for the tourism accommodation impact of such events. The autoregressive count data model incorporates some of the more important factors in the planning and evaluation of an event, such as spare capacity, displacement effects and the costs that visitors face. The results for two large Swedish festivals indicate that there are some displacement effects but that the net tourism effect is positive, since the average visitor stays longer during festival periods. In the final year of the sample the festival increased the accommodation receipts for the hotels in Stockholm and Gothenburg by 2% and 6%, respectively.

While the economic impacts of professional sports events and entertainment facilities in major metropolitan areas have been the subject of numerous studies, sports and entertainment facilities in smaller cities have received less attention. This study addresses the economic impact of a multi-purpose sports and auditorium facility located in a small metropolitan area. Intercept surveys at eleven representative events provided information on attendees' expenditures and residence and on the role of the event in motivating visits to the area. Data on attendee expenditures, together with facility operation and vendor outlays, were applied to an input–output model to estimate secondary impacts. The results indicate that the events hosted at the facility varied substantially in their potential to draw attendees from outside the local area and that attendees' expenditure patterns also varied by event type. The overall economic impact of the facility was substantial.