Question

Explain the determinants of tourism demand.

Long Answer required.

Answer 1

Introduction:

Demand refers to the total amount of a good, or a service which an individual is able, and willing to buy at a given price and at a given point of time.

Explanation:

The demand for goods, and services is affected by various factors, such as good being a necessity, or a luxury good, the portion of income spent on the good, availability of various substitutes of the good, and the time period involved in changing the demand.

Tourism industry is one of the major income generating industries is many nations around the globe.

The factors that determine the demand of tourism are as follows:

Disposable income:

The income in the hands of people plays a major role in determining the demand of tourism. At times when the global economy is flourishing, then people have more income, and try to spend on vacations, and travelling. Even within a nation, the tourism demand rises when economy is witnessing economic growth, because then people favor leisure activities.

Competition:

As there is more competition in the tourism industry, so that new places for vacations are discovered, then the tourism demand for a particular place will decline.

The less competition between the tourist’s spots in a region leads to higher tourism demand, because the availability of options are less.

Distribution of wealth:

This plays a very important role in determining the demand for tourism. It can be seen that in under developed, or developing nations, the demand for tourism is extremely less. This is because the people in such nations cannot afford luxury goods, such as vacations.

While in nations where wealth distribution is equal the demand for tourism is high.

Advertising;

More advertising of a place leads to higher demand of tourism in that place. This is because people get attracted to the place through advertisements, and it makes them visit the place.

There are many places which are extremely beautiful but do not get many tourists, this is because of the unawareness of people.

Government regulations:

Lower regulations by the government, and lower restrictions for tourists helps in flourishing of tourism industry.

Lower regulations increase the tourism demand, and induces tourists to visit the place.

Exchange rates:

When the nation is having lower exchange rate, then the foreign nations find it cheap to visit the country, because the value of their currency is higher than the place they want to visit.

This raises the influx of tourists, and increases the demand of tourists.