Describe the main factors affecting tourism demand.
There are some other important factors that affect demand for tourism as well. Let's take the tourism industry in Mexico as an example. While blessed with large stretches of tropical beaches and a well developed resort infrastructure, tourism to Mexico is way off in the last two years not only because of the worldwide economic recession, but because of the perception of danger people currently have.
While the resort cities are largely very safe, the main focus of media coverage regarding Mexico is the drug violence, corruption and kidnapping. While Cabo is not Juarez, and Cancun is not Tijuana, perception is perception and the idea that family and friends may not be safe if they travel to Mexico right now has really taken the wind out of their tourist revenue.
Economists argue that there are a variety of factors (other than the price of tourism) that could affect the demand for tourism. These factors include:
- The income of the consumers. When the population that is the source of the tourism goes into a recession, for example, demand for tourism drops.
- The tastes of the consumers. For example, if vacations go out of style (if, perhaps, consumers believe that it is more "green" to stay home than to take an airplane to some exotic vacation spot), the demand for tourism drops.
- The cost of complementary goods. If you think of air travel as a complementary good to tourism, you will realize that an increase in the price of air travel will cause a decrease in the demand for tourism.