1. Tourism and Hotel economics THM102 week 7 Title: 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 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
High Travel Propensity
High Education
More Awareness
More Income
Private Vehicle
Better Travel Facilitation
Good Exchange Rate
Shorter Travel Distance
Low Travel Cost
Young Age
Low Travel Propensity
Low Education
Low Awareness
Low Income
No ownership of Vehicle
Poor Travel Facilitation
Poor Exchange Rate
Long Travel Distance
High Travel Cost
Old Age

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 Supply Receiving Generating Origin
Destination
Marketing and Promotion

21. TYPES and FORMS of TOURISM
1. Political Boundary
National/Domestic/Intra
International
Regional
2. Distance Travelers
Long Haul
Short Haul
3. Direction
Inbound
Outbound
4. Pattern of Level
FIT
GIT
5. Interest
Mass/ Conventional
Alternate
FORMS
Historical
Cultural
Religious/Pilgrimage
Educational
Sports
Heritage
Youth
Entertainment
Shopping
Political
Social
Sociological
Medical/Health
Relaxation
Ethnic
Adventure

22. TYPES and FORMS of TOURISM
6. Planning
Rural
Urban
7. Location
Mountain, Beach, Desert, City, Space
8. Time
Seasonal
Year round
FORMS
Nature/ wildlife
Business/ Convention

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