Tourism Demand Concepts

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Tourism concepts

Dr. Nimit ChowdharyProfessor

Indian Institute of Tourism and Travel Management

Tourism demand concepts

September 17, 2007 (C) Prof. Nimit Chowdhary @IITTM 2

Tourism Concepts


Defining tourism demand

The total number of people who travel, or wish to travel, to use tourist facilities and services at places away from their places of work and residence

Geographers

Perspective of motivation and behaviourwhy people will ask for tourism

Psychologists

Schedule of the amount of any product or service that people are willing and able to buy at each specific price in a set of possible prices during a specified period of time

Economist


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Approaching tourism demand

Brings into perspective determinants of demand other than price those will influence participation and possible participation in tourism!

Geographer’s approach

What personality traits and external influences will affect willingness to buy a tourism product!

Psychological approach

Idea of elasticity- what happens to quantity demanded when prices and other things change!

Economicapproach


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Three concepts of demand

Effective or actual demandSuppressed demandNo demand


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1. Effective demand

Actual number of participants in tourism or those who are traveling, i.e. de factotourists Commonly and easily measuredBulk of tourism statistics refers to effective demand


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2. Suppressed demand

Comprises of people who would like to travel but do not travel for some purpose

Potential demand refers to those who would travel at some future date if circumstances change, e.g., purchasing power or leave entitlement may increaseDeferred demand is a demand postponed due to a problem in supply environment, e.g., lack of capacity in accommodation

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3. No demand

Those who simply do not wish to travel or are unable to travel, constituting a category of no demand


Tourism Concepts


Two more conceptsSubstitution of demandRefers to a case when demand for one activity (say a self catering holiday) is substituted by another (staying in serviced accommodation)Redirection of demandWhere the geographical location of demand is changed, e.g., trip to Ooty is redirected to Darjling


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A new tourism supply

Might redirect demand from similar facilityMight substitute demand from other facility (tourism product)Might generate new demand


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Indicators of tourism demandTwo commonly used indicators of tourism demand are:

Travel propensityPenetration of tourism trips in a populationDemand scheduleRefers to the quantities of a product that an individual wishes to purchase at different prices at a given point in time


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Indicators of tourism demandTravel propensity

Net travel propensityRefers to the percentage of the population that takes at least one tourism trips in a given period of timeGross travel propensityTotal number of tourism trips taken as a percentage of the population


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Travel propensitycalculations

Say,Out of a population of 10 m inhabitants3.0m take one trip of one night or more 3.0 X 1 = 3.0 mt1.5m take two trips of one night or more 1.5 X 2 = 3.0 mt0.4m take three trips one night or more 0.4 X 3 = 1.2 mt0.2m take four trips of one night or more 0.2 X 4 = 0.8 mt

Total5.1m take at least one trip = 8.0 mt

mt = million trips

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Travel propensitycalculations

Now,

Net travel propensity = ---------------------------------- X 100

Number of population taking at least one trip

Total population= ------ X 100 = 51%5.1

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Gross travel propensity = ---------------------------------- X 100Number of total trips

Total population= ------ X 100 = 80%8.0

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Travel frequency = -----------------------------------

Gross travel propensity

Net travel propensity= ------ = 1.5780%

51%


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Country Potential Generation Index (CGPI)

mt = million trips

Measure of a country’s potential to generate trips

Ne = number of trips generated by the countryNw = number of trips generated in worldPe = population of countryPw = population of world

CPGI = -----------Ne / Nw

Pe / Pw

An index of 1 indicates and average capability. Countries with CGPI more than 1 generate more tourists


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Why tourism demand?

Consumer need

Consumer perception of what will satisfy

need

Actual attractions

Consumer perception of the attractions

If these two agree

Motivation to visit destination


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Tourism motivators

Ego enhancementRitual inversionPilgrimage ReligionHealth EducationPerceived authenticityConventions/ conferences

Cultural self-confidenceAnnual leaveWeekendsFlextimeLong service leaveDisposable incomeTransport systems

LocationClimateNational promotionRetail advertisingWholesale marketingSpecial eventsIncentive schemesNatural environmentTourist facilitiesTourist attractionsVFRCultureMan-made environment

Push Factors Facilitators Pull factors


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Ritual inversionsGeographical

Cool climate to Hot climateInland to CoastUrban to RuralPlains to MountainsSparse vegetation to Lush vegetation


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Ritual inversionsPhysical/ mental

Mundane to ExcitementStressful to TranquilActivity to RelaxationModern to HistoricSecular to ReligiousSaving to SpendingFormal to InformalWork to LeisureAlienation to Communication

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Ritual inversionsPhysical/ mental

Non-learning to EducationalFamiliar to Unfamiliar Non-artistic to ArtisticCultural norms to New cultureSeparation to Family/ friendsFrugality to Luxury Routine to Non-routineSerious to FunRestriction to Freedom


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Determinants of suppressed demand

Travel is expensive and demands a certain threshold of income before people can undertake tourism. It competes with other products for available funds.Lack of time may be a problem for some individuals- cannot afford to be away from homePhysical limitations (such as ill-health) are a significant reason for many people not traveling.


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Determinants of suppressed demand

Family circumstances such as commitments, those who are single parents, or have to care for elderly relatives may prevent travel.Government restrictions such as currency controls and visas may act as a real barrier to travel (both inbound and outbound) for some countries.Lack of interest/ fear are real barriers for some individuals


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Advertising and promotion

Travel literature

Suggestions/ reports from other travelers

Travel trade suggestions and recommendations

1. TRAVEL STIMULI

Confidence in travel trade intermediary

Image of destination/ service

Previous travel experience

Assessment of objective/ subjective risks

3. EXTERNAL VARIABLES

Constraints of time/ cost etc.

MOTIVATIONS

2. PERSONAL AND SOCIAL DETERMINANTS OF TRAVEL BEHAVIOUR

Attitudes and values

Social influences and

aspirationsPersonality

features Socio-

economic status

DESIRES/ NEEDS EXPECTATIONS

Type of travel arrangement

offered

Attractions/ amenities

offered

Quality/ quantity of travel

information

Cost/ value relations

Range of travel opportunities

4. CHARACTERISTICS AND FEATURES OF SERVICE DESTINATION

TRAVEL DESIRES

INFORMATION SEARCH DECISION

ASSESSMENT/ COMPARISION

OF TRAVEL ALTERNATIVES


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Case 1: Leading position of Europe

Large segments of population receive relatively high incomes, resulting in high levels of disposable incomesPaid leave from work is normal in European countriesHigh proportions of population of, for example, Germany, France and UK attach very high priority to annual foreign holiday and are reluctant to let is go even during recession


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Case 1: Leading position of Europe

There is a wealth of both natural and man-made attractionsDemand for foreign travel is satisfied by a large tourist industry and the necessary infrastructureInternational travel need not involve great distances, owing to relatively small countries

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Case 2: Characteristics of generating markets

It includes at least one of the four top generators of international tourism world wide- Germany, US, Japan and UKIt includes neighbouring states, as the distance and cost involved are relatively smallIt includes countries further afield if, as in the case between the USA and Western Europe, air travel is available and at a cost within the reach of large segments of the population


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Case 2: Characteristics of generating markets

It depends upon the size of the population of generating states and their propensity to travelIt depends upon ease of travel across the bordersIt depends upon the real and perceived price of trips to the destinationIt depends upon the attractiveness of the destinationIt depends upon the social, cultural and historical links between the countriesIt depends upon marketing activity and appropriate supply

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Tourism Demand Concepts