Critical Issue in Tourism

1. Critical Issue in Tourism Jean-Louis CACCOMO Economist at Perpignan Via Domitia University

2. PART I. Economics and Tourism Basic economic tools and concepts

3. Tourism and environment Tourismpotential Question : Comment on the different links between tourism and environment

4. Structural conditions • Tourism depends on economic development and open, free societies • These conditions are very localized but diffuse with globalization.

5. Tourism as a market

6. Tourism and growth Free time Productivity Power of travelling Income Tourism demand Economic growth

7. The market analysis • The main laws (supply, demand, equilibrium) • The definition of shocks • Exercises : illustrate different kind of possible shock with the following table.

8. Market shock in international tourism : make the corresponding graph.

9. Example of adaptation process Decreasing price 1 Technological innovation 2 Increasing quantity • Causality (like the demand law, or the supply law) • Correlation: price and quantity are both affected by technological shock • Question : give the difference between the demand law or the supply law • And the equilibrium law

10. The Price effect • The price-elasticity measure the sensitivity of supply or demand (Q) to a change in price (P). • Price (P), receipt (R) and elasticity (e)

12. The income effect The income elasticity of tourism demand - Definition - Give the mathematical formulation - the distinction between primary/luxury good : for luxury good, income elasticity of demand exceed 1. Question : In which category do you range tourism goods & services ?

15. Real world demand elasticities in international tourism • International travel is a luxury good with income elasticities of demand exceeding 1. • Consumers appear to be more price sensitive to the cost transportation and currency change rather to destination price. • Demand for international travel is generally not very responsive to the promotional or marketing expenditures of national tourist offices.

16. The Maslow pyramid (1954) • The basic concept is that the higher needs (tourism) in this hierarchy only come into focus once all the needs that are lower down in the pyramid are mainly or entirely satisfied. • Growth forces create upward movement in the hierarchy. • How does the Maslow pyramid illustrates the connection between income and demand ?

17. Exercises • Exercises 1 and 2

18. Public and private interactions in tourism supply Transportation Private components (tourism strategy) Hospitality entertainment & services Tourism goods & services Heritage, climate Public components (tourism policy) Institutions Infrastructure Generic information Question: Describe the objective of each area

19. Dynamical interactions Taxes Revenue The state produces public Good & services Firms combines public input with privates input To create wealth Wealth increasing Public sector Private sector

20. References • Bull A. [1995] The Economics of travel and tourism. Longman Australia Ltd. • Caccomo J.L., Solonandrasana B. [2006] L’innovation dans l’industrie touristique. Deuxième édition, L’Harmattan, Paris. • Caccomo J.L. [2005] L’épopée de l’innovation, L’Harmattan, Paris. • Crouch G.I. [1995] « A meta-Analysis of tourism demand », Annals of Tourism Research, vol. 22,103-118. • Medlik S. [1995] Managing Tourism. Butterworth-Heinemann Ltd, Oxford. • Pizam A., Mansfeld Y. [1999] Consumer behaviour in travel and tourism. The Haworth Hospitality Press, New York and London. • Tisdell C. [2000] The Economics of Tourism. Edward Elgar Publishing Limited, Massachusetts. • Tribe J. [1995] The Economics of Leisure and tourism. Butterworth-Heinemann Ltd, Oxford.