Tourism Demand Modeling by Purpose of Visit and Nationality

Abstract

This study compares results from tourism demand models where tourism expenditures are modeled separately by purpose of visit and nationality pairings against results from models for which expenditure is treated on a more aggregate basis. A structural time-series model is estimated for each case, with data for inbound tourism demand to the United Kingdom, with the same set of explanatory variables. Not only can conducting the analysis on a disaggregate basis improve model estimates, but in some instances aggregate models introduce systematic errors into the estimation process. Moreover, demand modelers often spend considerable effort in comparing econometric techniques using aggregate data. Therefore, this study argues that consideration of modeling at less aggregate levels should be considered more routinely in demand modeling.