Describe the main factors affecting tourism demand.
There are several factors that affect the demand for tourism. One set of factors deals with the price people have to pay. The cost of getting to a destination is a factor. Higher travel costs may lower demand. The cost of accommodations, food, tours, entertainment, and local travel may all also impact tourism demand. If these costs are high, demand may drop.
There are non-price factors that impact tourism demand. The climate of a location is an important factor. If the climate is too hot or too cold, demand will be impacted. The reputation of a location is another important factor. If a place has many things to do and has many attractions, tourism demand should increase. If a destination is known as a safe location, it will be attractive to tourists. The condition of the economy at home and abroad also impacts tourism demand. If the economy is good, people may be more willing to travel, since they may have more disposable income.
There are several factors that affect 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.