Factors Influencing Visitor's Choices of Urban Destinations in North ...

Table 25: Types of Explanatory VariablesExplanatory VariableIncome 84%Relative Prices 73%Transportation Costs 55%Exchange Rates 25%Trend 25%Dynamics 28 26%Competing Destinations/Goods 15%Seasonal Factors 14%Marketing Expenditures 7%Migration 5%Business Travel/Trade 5%Economic Activity Indicators 3%Qualitative Factors 60%Other 29 27%How ManyStudies Used ThisVariable?Source: Lim (1997)Qualitative factors: Qualitative factors were typically accommodated with the use ofdummy variables. Time trend variables are often included to capture secular changes intourist tastes for foreign travel (i.e. population increase, change in the age structure of apopulation, the increase in the length of paid holidays). Dummy variables are also used tocapture seasonal variations in the tourism demand.“Cointegration Versus Least Squares Regression”Kulendran and Witt (1997) compared the forecasting performance of error correctionmodels to simple OLS models, naïve “no change” models, and statistical time-seriesmodels to help determine whether models incorporating contemporary econometrictheory can help provide more accurate forecasts of tourism demand. Having examinedvisits from the United Kingdom to eight European nations over 1978-95, Kulendran andWitt found error correction models to be superior to OLS models in 75% of the cases.However, the “no change” and some statistical time-series models were often moreaccurate still.Explanatory variables (not seasonally adjusted) include:• UK real personal disposable income per capita;28 Dynamics is captured by lagged effects, such as the previous values of income, relative prices, exchangerates, and foreign investment.29 Other variables include real tourist expenditure; supply/capacity constraints on tourist accommodation;exchange rate reforms or foreign exchange restrictions; cross-price elasticities of vacation goods; and theaverage propensity to consume tourism goods.55