Measuring and Forecasting Demand - Tourism: Principles, Practices, Philosophies - page 286

INTRODUCTION

E conomists de ne demand as a schedule of the amount of any product or service that people are

willing and able to buy at each speci c price in a set of possible prices during some speci ed period
of time. Thus, there exists at any one time a de nite relationship between the market price and the
quantity demanded.

WHY DEMAND IS IMPORTANT

The amount of demand for travel to a particular destination is of great concern to anyone involved in
tourism. Vital demand data include: (1) how many visitors arrived, (2) by what means of transporta-
tion, (3) how long they stayed and in what type of accommodations, and (4) how much money was
spent. There are various measures of demand; some are much easier to obtain and are usually of more
general interest than are others. Techniques also exist for making forecasts of future demand. Such
estimates are of great interest to anyone planning future tourism developments. The availability of
financing will depend largely on reliable forecasts of the future gross sales or revenues from the project
to determine if the proposal will be financially feasible.
Marketing and sales promotion programs are, of course, aimed at increasing demand. Sometimes
this effort focuses on increasing demand at certain times of the year or to a particular market. But the
basic purpose is the same: to increase demand.

DEMAND TO A DESTINATION

In somewhat more speci c terms, the demand for travel to a particular destination will be a function of
the person ' s propensity to travel and the reciprocal of the resistance of the link between origin and

destination areas. Thus,

D ¼ f ð propensity ; resistance Þ

where D is demand.
Propensity can be thought of as a person in other words, how willing the

person is to travel, what types of travel experiences he or she prefers, and what types of destinations
are considered. A person

' s predisposition to travel

—

s propensity to travel will, quite obviously, be determined largely by his or her
psychographic pro le and travel motivation, as discussed in previous chapters. In addition, a person

'

s
socioeconomic status will have an important bearing on propensity. It follows that to estimate a
person

'

s propensity to travel, we must understand both psychographic and demographic variables
concerning the person. Propensity is directly related to demand.
Resistance, on the other hand, relates to the relative attractiveness of various destinations. This
factor is, in turn, a function of several other variables, such as economic distance, cultural distance, the
cost of tourist services at destination, the quality of service at destination, effectiveness of advertising
and promotion, and seasonality. Resistance is inversely related to demand.

'

Economic Distance

Economic distance relates to the time and cost involved in traveling from the origin to the destination

area and back. The higher the economic distance, the higher the resistance for that destination and,
consequently, the lower the demand. It follows, conversely, that between any origin and destination
point, if the travel time or travel cost can be reduced, demand will increase. Many excellent examples
of this are available, such as the introduction of the jet plane in 1959 and the introduction of the