Forecasting Tourism Demand: Methods and Strategies
Sample Chapter, continued
The visitor is the foundational unit in the UN/WTO structure and is defined as any person traveling to a place other than that of his or her usual environment for less than twelve months and whose main purpose of trip is other than the exercise of an activity remunerated from within the place visited.
Tourism comprises the activities of persons traveling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes.Tourists are visitors who stay at least one night in a collective or private accommodation in a place visited.
The same-day visitor is a visitor who does not spend the night in a collective or private accommodation in the place visited. This includes cruise passengers who debark in a country but spend their nights on board ship.
Tourism expenditure is the total consumption expenditure made by a visitor on behalf of a visitor for and during his or her trip and stay at a destination.
The tourism industries designate the set of enterprises, establishments and other organizations one of whose principal activities is to provide goods and/or services to tourists.
A term central to this book yet not officially defined by the WTO for forecasting purposes is 'tourism demand'. As employed in this book:
Tourism demand is a measure of visitors' use of a good or service.
'Use' in this case means to 'make use of (a thing), esp, for a particular end or purpose; utilize' (Brown, 1993: 3531).
Such use includes the economists, concept of consumption, as well as the presence of a visitor at a destination' port of entry or other tourism facility and on a transport vehicle' regardless of whether any exchange takes place' Consequently, visitor arrivals in a country or local area constitute tourism demand since visitors avail themselves of the services of a destination in arriving there. Tourism demand can be measured in a variety of units, including a national currency, arrivals, nights, days, distance traveled and passenger-seats occupied.
Archer (1994: 105) aptly describes the objective of tourism demand forecasting as 'to predict the most probable level of demand that is likely to occur in the light of known circumstances or, when alterative policies are proposed, to show what different levels of demand may be achieved'.
The importance of tourism demand forecasting
The tourism industries, and those interested in their success in contributing to the social and economic welfare of a citizenry, need to reduce the risk of decisions, that is, reduce the chances that a decision will fail to achieve desired objectives. One important way to reduce this risk is by discerning certain future events or environments more clearly. One of the most important events is the demand for a tourism product, be it a good, a service or a bundle of services such as a vacation or what a destination offers.
All industries are interested in such risk reduction. However, this need may be more acute in the tourism industries than for other industries with other products, for the following reasons:
The tourism product is perishable. Once an airliner has taken off, or a theme park has closed for the day or morning dawns over a hotel, unsold seats, admissions or sleeping rooms vanish, along with the revenue opportunity associated with them. This puts a premium on shaping demand in the short run and anticipating it in the long run, to avoid both unsold 'inventory' on the one hand and unfulfilled demand on the other.
People are inseparable from the production-consumption process. To a large extent, the production of the tourism product takes place at the same time as its consumption. And much of this production-consumption process involves people interacting as suppliers and consumers, such as hotel staff, waiters and waitresses, flight attendants and entertainers. This puts a premium on having enough of the right supply personnel available when and where visitors need them.
Customer satisfaction depends on complementary services. While a hotelier directly controls only what happens to guests in his or her hotel, the visitor's experience depends on satisfaction with a host of goods and services that make up the visit. A hotel's future demand, therefore, depends on the volume of airline flights and other transport access to its area, the quality of airport services, the friendliness of taxi drivers, the quality and cost of entertainment and the availability of recreational opportunities, to name just a few of these elements. Forecasting can help ensure these complementary Services are available when and where future visitors need them, which will rebound to the benefit of the hotel or other individual tourism facility.
Leisure tourism demand is extremely sensitive to natural and human-made disasters. Much holiday and vacation travel is stimulated by the desire to seek refuge in venues far from the stress of the everyday environment.More over, today there are countless alternatives for spending leisure time pleasantly for residents of most developed nations. As a result, crises such as war, terrorist attacks, disease out breaks, crime and extreme weather conditions can easily dissuade leisure travelers from visiting a destination suffering from one of these, or from traveling at all' The ability to forecast such events and their projected impact on tourism demand can help minimize the adverse effects of catastrophes on the tourism-related sales,income, employment and tax revenue of a place.
Tourism supply requires large, long lead-time investments in plant,equipment and infrastructure.A new hotel may take three to five years from concept to opening. A new airport or ski resort make take a decade or so for all planning, approvals and construction. A new aero plane may take five years to produce from an airline's initial order to final delivery. Future demand must be anticipated correctly if suppliers are to avoid the financial costs of excess capacity or the opportunity costs of unfilled demand.
While there are industries that share one or several of these constraints on decision-making, the tourism industries appear to be unique in being shackled by all five.
Alternative views of the future
There are two extreme views of any event in the future that we need to be aware of. one extreme is that the event is absolutely predictable, that its occurence has a l00 percent probability 'Ofcourse' there is no future event in the universe that has such a high probability,although the positions of the planets in our solar System, the hours of sun rise and sunset, and many other events studied in the physical sciences come close to this, atleast in the medium term.
Certain future events in tourism are a sure thing as well. These include that at least one person in Europe will begin a trip away from home tomorrow,that atleast one hotel will be partially occupied and that at least one government will accrue some revenue as a result of tourism this year.
These nearly certain events have at least two characteristics in common: forecasting them accurately is quite easy, and these forecasts are useless to tourism managers. They are useless because they are trivial. Furthermore, no action we can take will change these occurrences.