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

• The cost of living for tourists in the destination country relative to the cost ofliving for tourists in the United Kingdom (proxied by the consumer price indexadjusted by the exchange rate with the origin country);• The cost of living for tourists in the destination country relative to a weightedaverage of the cost of living in nine other competing foreign destinations;• Real standard air fare from the United Kingdom to the destination country; and• The airfare from the United Kingdom to the destination relative to a weightedaverage of airfares to competing foreign destinations.Seasonal dummies were also included in the model to capture seasonal fluctuations of thedependent variable.The authors concluded that future studies should pay more attention to recentdevelopments in econometric theory in constructing tourism demand models.“Why People Travel to Different Places”Papatheodorou (2001) indicates the importance of including supply side factors such asproduct differentiation and corporate power exercised by tourism product providers indemand models. According to Papatheodorou, traditional demand theory, as it is utilizedin most existing tourism demand models, is not sufficient to explain the direction oftourism flows. He notes several drawbacks of using tourism demand systems to forecastthe market shares of destinations:The assumption of a representative tourist is highly unrealistic given a heterogeneitynature of a specific leisure tourist or group of tourists.The static nature of the traditional demand theory cannot account for the evolutionaryfeatures of the tourism product (i.e. appearance of new resorts). It is also important todifferentiate one tourism product from the other (i.e. Greek tourism product is differentfrom Mexican or Chinese product).Third, the traditional demand theory can only work within a competitive environmentwhere the producers act as price takers who cannot manipulate tourists to accept higherprices for a tourism product. In reality, however, the trend towards global consolidationbetween tourism product providers creates opportunities for oligopoly. The establishmentof oligopolistic power in the market is detrimental to a consumer.“Forecasting Tourist Arrivals”Lim and McAleer (2001) used various exponential smoothing models to forecastquarterly tourist arrivals to Australia from Hong Kong, Malaysia, and Singapore. Themodels were estimated over the period of 1975-99 using quarterly data. One-quarterahead international tourism forecasts for the period 1998(1)-2000(1) were evaluated interms of the forecasting accuracy using root mean squared error criterion (RMSE).Models: The exponential smoothing models tested include the single-equation models asfollows: the Holt-Winters additive and multiplicative seasonal models, single, double,and the Holt-Winters non-seasonal exponential smoothing models.56