Measuring and Forecasting Demand

Measuring and ForecastingDemand13LEARNING OBJECTIVESUnderstand the concept of demand and its application and importance in tourism development planning.Understand the factors determining the magnitude and fluctuations of demand.Become able to apply various methods to measure and forecast demand.VITAL DEMAND DATANumber of visitorsMeans of transportation used by visitors to arrive at destination Length of stay and type of accommodations usedAmount of money spent by visitorsDemand for travel to a particular destination is a function of the propensity of the individual to travel and the reciprocal of the resistance of the link between origin and destination areasD(emand)= f (propensity, resistance) Propensity depends on: Psychographics Demographics(socioeconomic status) Marketing effectivenessResistance depends on: Economic distance Cultural distance Cost of tourist services Quality of service SeasonalityDEMAND TO A DESTINATIONMEASURES OF ACTUAL DEMANDVisitor arrivalsNumber of people arriving at a destination who stay for 24 hours or longerVisitor - days or - nights= no. of visitors × avg. no. of days or nights at destinationAmount spent= no. of visitor - days or – nights × avg. expenditure per day/nightPROJECTION METHODOLOGYSeveral statistical methods or econometric analysis can be used to project demand:Trend analysis methodSimple Regression: Linear least square methodMultiple Regression: Linear least squares methodComputer simulations and modelsExecutive Judgment (Delphi) methodECONOMIC DISTANCEEconomic distance relates to time/cost involved in traveling from origin to destination and backThe higher the economic distance, the higher the resistance for that destination and, consequently, the lower the demandConversely, between any origin and destination point, if travel time or cost can be reduced, demand will increaseExcellent examples include:introduction of jet plane in 1959 introduction of wide - bodied jets in the late 1960sJets cut travel time between California and Hawaii from 12 hours to 5; demand grew dramaticallyA similar surge was experienced with the introduction of wide-bodied planes for transatlantic flight, which cut travel cost by almost 50% between the US and most countries on the European continentCULTURAL DISTANCECultural distance refers to the extent to which the culture of the area from which the tourist originates differs from the culture of the host region. In general, the greater the cultural distance, the greater will be the resistance. In some cases, the relationship might be the opposite. For example, the higher the cultural distance between particular origin and destination areas, the more an allocentric person may wish to travel to that destination, to experience this extreme difference.