definition of tourism demand

Tourism demand determinants- made simple

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Understanding tourism demand is vital if we are to create and maintain an efficient, profitable and sustainable tourism industry. But what are the major tourism demand determinants that organisations need to consider? Read on to find out….

What are tourism demand determinants?

Tourism demand- life cycle stage, social structures, population and ageing, tourism demand- the changing economy, tourism demand- education, tourism demand- modern generations and technology, tourism demand- money rich, time poor, tourism demand- fashion, tourism demand- further reading.

The determinants of demand are factors that cause fluctuations in the economic demand for a product or a service. This is important to consider both in the travel and tourism industry as well as in other industries. Ultimately, we need to understand what demand is and do our best to meet that demand. For example, nowadays less people are in search of the traditional package holiday and are instead seeking niche tourism experiences. In response to this, many tour operators have adapted the products that they offer to suit the demands of the tourists- instead of selling predominantly beach and ski holidays, many are now offering the likes of adventure tourism trips and wellness tourism retreats.

Tourism is demand-driven, so to understand current trends in tourism we must understand how patterns of demand are changing. Demographic and social changes are seen as major influences on, in particular, international tourism . Dwyer (2005) argues that several types of demographic variables are changing in ways that will influence future demand for tourism and the specific types of tourism experience that will be preferred.

There are many tourism demand determinants to consider, but the major ones include:

• Life cycle changes
• Ageing population    
• Education    
• Employment    
• Time    
• The pleasure industry

The life cycle stage is always an important determinant in tourism demand, because people of different ages tend to have different demands! Here are some typical demands that we may expect from different age groups-              

• Children – Will the American version of summer camp become more popular around the world as both parents work longer hours
• Adolescents – Are at the peak of their leisure needs but lack both the freedom and the money to indulge these needs– will this change? If so, how?
• Young people – these represent 20% of the market and the likes of backpacker tourism is assuming ever-greater importance. Young people are taking more gap years and volunteer tourism is growing in popularity. The adventure tourism market is to a large extent driven by ages 17-35.
• Families- Many families are now choosing to travel further afield and for longer than before, educational tourism and slow tourism are growing in popularity.
• Elderly people- As we grow older we tend to have more time and more money to spend on travel. Cruise tourism remains popular with elderly people, but older people are also embracing a range of alternative tourism forms too.

Tourism demand- Social and demographic variables

It is important that tourism industry stakeholders are aware of and up to date with current social and demographic variables associated with their customers.

Many social structures around the world are changing or evolving. This includes aspects such as community aspirations, business structures and family and individual values – all of which are experiencing profound change globally.

• The erosion of Western households is also something to note: households with no children are on the increase as people marry later and have fewer children.
• Family structures are changing too – the nuclear family is being replaced by the vertical family . Three or more generations may choose to holiday together, especially amongst those from developing nations, where families tend to live together across multiple generations.
• One-parent families are common as increasing numbers of families break up.
• There is an increase in the lucrative DINKS (Double Income, No Kids) market – this is an important market for special-interest and long-haul travel.
• There is nowadays a generally more relaxed attitude towards gay couples, and the number of companies targeting gay travellers, has led to growth of the gay market – the ‘pink’ market demonstrates the largest increase of any social group wanting to travel, and has large amounts of disposable income.

The way that we grow old has also changed over time, and this is another important tourism demand factor that tourism industry stakeholders must consider.

• There are an increasing amount of people who divorce nowadays compared to previous years, which naturally changes the way that these people travel.
• Many older people, who are fitter and more active than in previous generations, wish to enjoy the same activities and entertainment that they enjoyed in their youth; they also have more disposable income to spend on these activities.
• ‘Empty nesters’ are high spenders on travel and tourism – active and adventurous they see travel as an integral part of a fulfilling retirement.
• With above-average wealth and relatively few demands on their time the elderly make up an increasingly large part of the tourism market.
• Alongside evidence of a growing propensity to travel and spend (Huang and Tsai 2003; Reece 2004), consumption is often deliberately linked to low seasons balancing out the peaks and valleys for tourism suppliers (Hunter-Jones and Blackburn, 2009).
• New senior citizens, ‘young sengies’ (young senior generation), ‘woopies’ (well off older people), ‘retiring baby boomers’, ‘generation between’, ‘third age’ and the ‘grey market’ (Lohmann and Danielsson, 2001) are all terms used to describe what is collectively known as the ‘senior market’.
• The over-50s form an increasingly complex and diverse group. Many of them are well-off and have a high disposable income, although there is a polarity between the haves and have-nots (Beioley, 2001).
• In the UK, approximately 44% of all adults are 50 plus, that is over 20 million people and the over 60s now account for more than 20% of the population .
• In the US this ‘Third Age’ is set to exhibit the strongest growth of all demographic segments in the next five years, generating a group representing over one-quarter of the total population.
• In OECD countries the over 65s grew from 145.8 million in 2000 to 211.2 million in 2020.
• There is a significant growth in the number of ‘third age’ (49-64) travellers. This is a demanding group for whom self-fulfilment is important, wanting not only adventure but also comfort and putting more emphasis on accommodation quality, sightseeing and social aspects of the holiday and care less about nightlife, beaches and hot weather (Beioley, 2001).
• Because the elderly are often well-travelled they consciously seek new places to visit that are often ‘off the beaten track’.
• They are more environmentally and socially conscious and will reward firms that show high levels of environmental/social responsibility.
• The elderly frequently will demand honesty and integrity from travel companies and will reward such companies with their custom.

Since the COVID-19 pandemic, health has and will continue to play an ever-important role in the minds of the consumers. As such, those working in the tourism industry need to understand tourism demand in this area. Major considerations should be paid to:

• Medical facilities at the destination
• Levels of crime and terrorism

Outbound tourism has changed over the years and in response to this the tourism industry needs to meet the demands of the outbound tourists in which they are aiming to attract. Some things to consider include-

• The expanding economies of the BRIC countries (Brazil, Russia , India, China) with their growing middle classes.
• Outbound tourists from China have shown the most rapid growth (100 million by 2020) and this is set to continue post-pandemic.
• In India the 45-58 age middle class are already spending most of their disposable income on travel (Future Foundation).
• Recession tourism is a travel trend, which evolved by way of the world economic crisis. Recession tourism is defined by low-cost, high-value experiences taking place of once-popular generic retreats (Landau, 2007).

Education levels also have a significant impact on tourism demand.

• Increased education among the less privileged will necessarily affect travel choices.
• The interest in special-interest tourism has been fuelled by the educated classes.
• Forecasts predict an increase in special interest and educational holidays which provide opportunity to learn from tour guides or other specialists in the field of interest.
• There is arguably greater environmental and social consciousness amongst better-educated tourists – this will fuel the demand for certain types of products.
• Lifelong learning will become the norm as people now entering the workforce can expect to have five separate careers in a lifetime (Cetron, 2002 in Lockwood and Medlik,2002).
• Large chains will increasingly become involved in training to ensure product uniformity and quality (this is important to the supply of tourism).
• Education is also an important element of tourism supply.              

As society we have changed and evolved over the years and the tourism industry needs to ensure that it is up to date with the tourism demands of modern generations. Some aspects to consider include:

• Modern generations are increasingly entrepreneurial and favour self-employment.
• They are experimental and willing to try new products, foods and attractions but are often intolerant of products or services that fail to satisfy – repeat purchasing will be out of the question in such cases.
• Customers for tourism are be much more technology-literate than they previously were– this has huge implications for the industry and has seen the introduction of the likes of smart tourism , e-tourism and virtual tourism .
• The modern so-called ‘dot.com’ generation (also known as generation Y) are the ‘connectivity kids’- they are consistently  communicating and may join global networks.
• They may tire of well-known brands quickly.
• They are interested in experience and are short-term and opportunity-focused.
• They are also strongly influenced by friends and peers; concerned to achieve a work-life balance; strongly opinionated on social and ethical marketing issues; and supportive of causes such as fair trade and volunteering (Cooper and Hall, 2008).
• Because the proportion of self-employed people has increased, business travel is increasingly self-funded, so the distinction between work time and holiday time will thus become increasingly blurred e.g. the workation .

Ultimately there are two things that we need to be tourists- money and time. However, this balance is not always optimal.

• Employment patterns necessarily affect tourist demand as money and paid holidays are enablers of travel.
• The workplace is changing: More time is spent at work and we take more work home with us than we did 10 years ago. In Europe 66% of women work outside the home. In the UK the number of non-working hours per year has decreased by 100 hours over the last decade.
• Increasing job insecurity means that people are afraid to be away from work too long, which leads to: More short holidays, more luxury weekend getaways, more intensive holidays, more convenience, relaxation and pampering, more leisure opportunities closer to home, more constant demand for breaks and higher spend.
• When examining the work-leisure continuum it becomes apparent that time pressure will be a determinant of the type of tourism sought.
• Tourist markets are segmented not only by disposable income but also by disposable time, which differs considerably around the world.
• The rhythm of leisure time will change and the work/leisure divide become increasingly blurred as the pace of life speeds up.

Ultimately, tourism is a fashion industry and destinations and types of tourism come in and out of fashion over time.

• The complex relationship between tourism demand and supply is based on the dynamics of people’s perceptions, expectations, attitudes and values.
• The demand for tourism is notoriously fickle as a result of its dependency on status and image.
• The interests and reasons for travel frequently change.
• Holidays that were previously purely recreational have in recent years moved into physical and mental rejuvenation; spiritual rejuvenation will follow.
• Customers are becoming more interested in self-improvement as part of the tourism experience with an emphasis on health, wellbeing, education, skills development and cultural appreciation.
• In an increasingly technological world, rain forests, wilderness areas, oceans and other unpolluted areas will provide a unique and necessary chance to escape from keyboards and mobile phones.
• These changes carry threats and problems but also opportunities.

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Elasticity, demand and supply, tourism

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In general terms, elasticity is the quantification of the relationship between two variables, measuring the ratio of the percentage change in a determining variable to the percentage change in the determined variable. Then, if it is assumed that a variable y is determined by the behavior of a variable x , the elasticity ( E ) referred to a certain change can be expressed analytically as

If the elasticity is referred to a certain point, expression ( 1 ) can be redefined in terms of partial derivates and becomes

From expression ( 2 ) it should be highlighted how in regression analyses, if variables are taken in natural logarithms, estimated coefficients can be interpreted directly as the elasticity between y and x (Rosselló 2012 ). In any case, an elastic (inelastic) relationship is one where the determined variable responds a lot (little)...

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Crouch, G. 1992 Effect of Income and Price on International Tourism. Annals of Tourism Research 19:643-664.

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Crouch, G. 1994 The Study of International Tourism: A Survey of Practice. Journal of Travel Research 32(4):41-55.

Li, G., H. Song, and S. Witt 2005 Recent Developments in Econometric Modeling and Forecasting. Journal of Travel Research 44:82-99.

Lim, C. 1999 A Meta-Analytic Review of International Tourism Demand. Journal of Travel Research 37:273-284.

Rosselló, J. 2012 Regression Analysis. In Handbook of Research Methods in Tourism, L. Dwyer, A. Gill and N. Seetaram, eds., pp.31-46. Cheltenman: Edward Elgar.

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Song, H., S. Witt, and G. Li 2009 The Advanced Econometrics of Tourism Demand. London: Routledge.

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Rosselló, J. (2015). Elasticity, demand and supply, tourism. In: Jafari, J., Xiao, H. (eds) Encyclopedia of Tourism. Springer, Cham. https://doi.org/10.1007/978-3-319-01669-6_67-1

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