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Tourism and Hotel economics THM102 week 7 Title: Introduction to Tourism

Tourism and Hotel economics THM102 week 7 Title: Introduction to Tourism. Learning Objectives: TOURISM DEMAND & SUPPLY. Be able to define demand and supply Understand the different approaches to demand Explain the concepts for supply and demand Describe the propensity of Travel

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Tourism and Hotel economics THM102 week 7 Title: Introduction to Tourism

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  1. Tourism and Hotel economics THM102week 7Title: Introduction to Tourism

  2. Learning Objectives: TOURISM DEMAND & SUPPLY • Be able to define demand and supply • Understand the different approaches to demand • Explain the concepts for supply and demand • Describe the propensity of Travel • Be able to explain the four factors which determine travel • Consider the characteristics and measurement of demand • Outline the components of supply • Be able to briefly describe the six factors of supply • Appreciate the link between supply and demand • Types and forms of Travel • Possible Exam questions

  3. TOURISM DEMAND • Mathieson and Well (1982) – The total number of persons who travel, or wish to travel, to use tourists facilities and services at places away from their places of work or residence

  4. APPROACHES TO STUDY TOURISM DEMAND • Economists- Tourism demand is measured in monetary returns gained within a period of time. Price, elasticity, quality. Revenue and Expenditure • Psychologists- Demand relates to motivation and behavior, personality, environment • Geographers- Demand based on geographic boundaries, demographics.

  5. TYPES OF DEMAND • Effective or Actual Demand- People actually traveling at a point of time. • Potential Demand- People who could travel if motivated • Deferred/Postponed Demand- People who wish to travel, but are not traveling presently due to temporary reasons, of self or supply end • Suppressed Demand – People not interested in travel

  6. CONCEPTS RELATED TO DEMAND • Demand Substitution- Demand for one activity is substituted by another. E.g. Camping to leisure cruise • Demand Redirection- Demand redirected to another product. Spain to greece • Demand Generation- Creation of new demand on creation of new products

  7. TRAVEL PROPENSITY – LIKELIHOOD TO TRAVEL • Net Travel Propensity- Percentage of population of the overall population who makes at least one trip during a given period of time. = Number of population taking at least one trip X 100 total population • Gross Travel Propensity- Total number of trips undertaken as a percentage of the population. = Number of Total Trips X100 Total Population

  8. TRAVEL FREQUENCY • Travel Frequency =Gross Travel Propensity Net Travel Propensity • Country Potential Generation Index (CPGI) CPGI = Ne/Nw Pe/Pw • Ne = Number of trips generated by country • Nw = Number of trips generated in the world • Pe = Population of the country • Pw = Population of the world

  9. HIGH AND LOW TRAVEL PROPENCITY

  10. FACTORS DETERMINING TOURISM DEMAND • Individual • Economic • Geographic • Destination

  11. INDIVIDUAL FACTORS • Education and Awareness • Mobility • Age, Gender, Religion • Income and employment, disposable income, household income, DINKS • Paid holiday • Family Influence • Nature of Family-joint, nuclear • VALS • Stage of Family Life Cycle • Gap Year Opportunities

  12. ECONOMIC FACTORS • Cost of Travel • Cost of Products • Competitive Prices • Exchange Rate

  13. GEOGRAPHIC FACTORS • Seasonality • Accessibility, location and distance • Attractions Available • Urban or Rural population or Economy

  14. DESTINATION FACTORS • Image – organic and induced • Promotion: travel channels, awareness, deals • Technology and development • CRS technology • Development Level • Credibility • Safety and Security • Attraction and Events • Quality of Product • Travel Formalities

  15. POLITICAL FACTORS • Government regulation on supply and tourists • Visas, formalities, health checks, currency, prohibitions • Transport regulation, accessibility, bilateral agreements

  16. CHARACTERISTICS OF TOURISM DEMAND • planned demand • Involves a lot of expenditure • There is no tangible return or purchase • Highly price elastic • Can be price inelastic too • Seasonality • Is not subject to law of diminishing returns • Changing demand patterns

  17. MEASUREMENT OF TOURISM DEMAND • Household Surveys • En route Surveys • Destination Surveys • Surveys of Suppliers

  18. COMPONENTS OF TOURISM SUPPLY • Infrastructure • Superstructure • Attractions • Marketing/Promotion and Destination Image Tourism Supply includes TOP and ROP

  19. FACTORS AFFECTING TOURISM SUPPLY • Economic • Political • Geographical • Legal • Technological • Social

  20. DEMAND-SUPPLY LINK Demand Generating Origin Supply Receiving Destination Marketing and Promotion

  21. TYPES and FORMS of TOURISM

  22. TYPES and FORMS of TOURISM

  23. Possible Exam Questions • Define demand • Outline the different approaches to demand • Explain the concepts for demand • Describe the propensity of Travel • Explain in detail the four factors which determine travel • Describe the characteristics of demand • Outline the components of supply • Briefly describe the six factors of supply • Explain the link between supply and demand • Outline the types and forms of Travel

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