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Optimizing tourist demands with utility efficient frontier

Author

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  • Hanitra Rakotondramaro
  • Laurent Botti

Abstract

Mean-variance portfolio analysis leads to determine tourist demands mix but it does not provide any information regarding the risk attitude of the decision maker. In this article, we propose to fill this research gap by proposing a methodological approach which combines the portfolio theory with the utility function technique. By doing so, our approach incorporates the risk attitude of the decision maker through different values of risk tolerance. We apply this methodology on destination management framework. An illustration of its strengths is suggested by using the case study of European tourists visiting France between 2008 and 2013. Our article shows that the optimal origins mix depends on the level of risk aversion of the destination manager. Accordingly, the implications of our methodological approach are highlighted.

Suggested Citation

  • Hanitra Rakotondramaro & Laurent Botti, 2018. "Optimizing tourist demands with utility efficient frontier," Tourism Economics, , vol. 24(2), pages 157-166, March.
    • Handle: RePEc:sae:toueco:v:24:y:2018:i:2:p:157-166
    DOI: 10.1177/1354816617729022
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    References listed on IDEAS

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    1. Barros, Carlos Pestana & Botti, Laurent & Peypoch, Nicolas & Robinot, Elisabeth & Solonandrasana, Bernardin & A., George Assaf, 2011. "Performance of French destinations: Tourism attraction perspectives," Tourism Management, Elsevier, vol. 32(1), pages 141-146.
    2. Zhang, Linjia & Botti, Laurent & Petit, Sylvain, 2016. "Destination performance: Introducing the utility function in the mean-variance space," Tourism Management, Elsevier, vol. 52(C), pages 123-132.
    3. Haiyan Song & Gang Li & Stephen F. Witt & Baogang Fei, 2010. "Tourism Demand Modelling and Forecasting: How Should Demand Be Measured?," Tourism Economics, , vol. 16(1), pages 63-81, March.
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    Cited by:

    1. Laurent Botti & Sylvain Petit & Linjia Zhang, 2020. "Strategic decision concerning tourist origins portfolio: A decision process based on the ELECTRE method and applied to French Polynesia," Tourism Economics, , vol. 26(5), pages 830-843, August.

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