Model Building and Simulation

1. Model Building and Simulation Chapter 43 Research Methodologies

2. Introduction • The use of models and simulation has grown rapidly • Both qualitative and quantitative models are available to assist managers and government officials analyzing and understanding their markets, the travel consumer, and the facilities and resources for which they are responsible.

3. What is Modeling • It is a simplified representation of a more complex process or condition. • It may be a quantitative model: which are commonly employed in the analysis and prediction of consumer behavior • It may be a qualitative model: which have the capability of providing the user with numerical outputs, which may be measurements of traveler flows and expenditures, forecasts on returns of investment, or estimates of changes in market share and the like

4. What is modeling cont… • It may be Static: and serve primarily to aid the understanding of the user • It may be dynamic: permitting manipulation of its components to test alternative actions or predict future conditions • It may also be simulation: it includes several of the modeling types already discussed, but also a number of variables can be examined under differing dynamic conditions over simulated periods of time, with the outcome determined through the process rather than providing a single solution

5. Uses of Models in Travel • Market and measure analysis, process or project monitoring and control, communications, consumer behavior and analysis and prediction, management-decision analysis, and training of personnel • Some examples: • Physical and economic impact models of tourism flows provide estimates of the size and composition of tourism activity within, and to and from the specified jurisdiction

6. Uses of Models in Travel cont… • The U.S government has used a model to estimate the total and net impact of travel on the U.S balance of payments • The federal government and many states have need for models to estimate the economic impact of tourism • Behavioral models developed specifically for tourism , or derived from other consumer research, provide important insights for the design of marketing strategies for all sectors of the travel industry A transactional analysis model has been proposed to explain the underlying reason why people decide to travel and the process that promotional efforts must undertake in order to motivate a decision to take a trip.

7. Models and Management • The growth in variety and quality of business management models over the past few decades has been great but it has not been proportionate to their acceptance and use. • Some reasons for this include: • Lags between theory and application • Inadequate communications to potential users • Lack in some organizations of personnel trained to use these techniques therefore they do not understand them

8. Benefits from the use of Models • Forces early organization of information, identification of potential problems, and location of information gaps and needs • Enables management to reduce the number of factors of uncertainty on which subjective judgment must be used • Increases understanding of the operational environments • Reduces risk and probability of wrong decision

9. Disadvantages • Management acceptance is imperative • Limitations of the models must be identified and understood in interpretation of results • Models, especially quantitative, are derived from empirical information, and therefore have to be updated and revalidated as environments change • Limitations in data, especially in the travel industry, may be difficult to overcome • The simplest useful model probably is best – level of complexity should increase as problem is more fully defined

10. Conclusion • This chapter has provided an overview of the nature, uses, and concepts of models used for the travel and tourism industry. • While modeling may require persons with special and highly technical skills, the use of models does not • One of the biggest barriers is likely to be gaining interest and acceptance of management. • It is important for senior management to become aware of and receptive to the potential that modeling and simulation offer for increased tourism revenues and profits