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Income and the substitution pattern between domestic and international tourism demand

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  • Juan Eugenio-Martin
  • Juan Campos-Soria

Abstract

This article analyses the role of income in the decision of participating in the tourism demand within 1 year. The tourists who are participating can travel to domestic destinations only, abroad destinations only or to both of them. Such a substitution pattern is modelled using a bivariate probit model. The analysis is carried out to the regional level using a survey conducted in 15 European (EU-15) countries. In addition to the traditional socioeconomic variables, the analysis adds new variables to the outbound tourism demand modelling, such as the attributes of the place of residence. The results show that tourism demand is income elastic. However, there are marked differences in the income elasticities of the probabilities of travelling domestically or abroad. Above certain income threshold, the substitution pattern between destinations takes part. The probability of travelling domestically only remains constant, whereas the probability of travelling abroad keeps growing. Additionally, the article proves that income elasticities vary significantly and nonlinearly with income.

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  • Juan Eugenio-Martin & Juan Campos-Soria, 2011. "Income and the substitution pattern between domestic and international tourism demand," Applied Economics, Taylor & Francis Journals, vol. 43(20), pages 2519-2531.
    • Handle: RePEc:taf:applec:v:43:y:2011:i:20:p:2519-2531
    DOI: 10.1080/00036840903299698
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    3. Duha Altindag, 2014. "Crime and International Tourism," Journal of Labor Research, Springer, vol. 35(1), pages 1-14, March.
    4. Cristina Bernini & Maria Francesca Cracolici, 2016. "Is Participation in the Tourism Market an Opportunity for Everyone? Some Evidence from Italy," Tourism Economics, , vol. 22(1), pages 57-79, February.
    5. Juan L. Nicolau & Lorenzo Masiero, 2013. "Relationship between Price Sensitivity and Expenditures in the Choice of Tourism Activities at the Destination," Tourism Economics, , vol. 19(1), pages 101-114, February.
    6. Deely, John & Hynes, Stephen & Cawley, Mary & Hogan, Sarah, 2023. "Modelling domestic marine and coastal tourism demand using logit and travel cost count models," Economic Analysis and Policy, Elsevier, vol. 77(C), pages 123-136.
    7. Turrión Prats, Judith & Duro Moreno, Juan Antonio, 2017. "Seasonality Determinants for the Main Markets in Spain," Working Papers 2072/306517, Universitat Rovira i Virgili, Department of Economics.
    8. Chia-Yu Yeh & Kang Ernest Liu, 2019. "Modeling Household Participation Decisions Between Domestic And International Trips By Semi-Nonparametric Regressions," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 64(01), pages 191-211, March.
    9. Eugenio-Martin, Juan L. & Cazorla-Artiles, José M., 2020. "The shares method for revealing latent tourism demand," Annals of Tourism Research, Elsevier, vol. 84(C).
    10. Cristina Bernini & Maria Francesca Cracolici, 2014. "Is Participation in Tourism Market an Opportunity for Everyone? Some Evidence from Italy," Working Papers 2014.17, Fondazione Eni Enrico Mattei.
    11. Olya, Hossein GT & Mehran, Javaneh, 2017. "Modelling tourism expenditure using complexity theory," Journal of Business Research, Elsevier, vol. 75(C), pages 147-158.
    12. Faruk Urak & Nihat Küçük & Abdulbaki Bilgiç & Steven T Yen, 2023. "Modeling censored tourism expenditures in Turkey with non-normal and heteroscedastic errors: An application of the inverse hyperbolic sine double-hurdle model," Tourism Economics, , vol. 29(3), pages 718-741, May.
    13. Maximilian Weigert & Alexander Bauer & Johanna Gernert & Marion Karl & Asmik Nalmpatian & Helmut Küchenhoff & Jürgen Schmude, 2022. "Semiparametric APC analysis of destination choice patterns: Using generalized additive models to quantify the impact of age, period, and cohort on travel distances," Tourism Economics, , vol. 28(5), pages 1377-1400, August.
    14. Campos-Soria, Juan A. & Inchausti-Sintes, Federico & Eugenio-Martin, Juan L., 2015. "Understanding tourists' economizing strategies during the global economic crisis," Tourism Management, Elsevier, vol. 48(C), pages 164-173.
    15. Ruben van Loon & Jan Rouwendal, 2013. "Vacation Behaviour: Frequency, Destination Choice and Expenditures," Tourism Economics, , vol. 19(5), pages 1005-1026, October.
    16. Chuanyong Zhang & Guoliang Feng, 2018. "More wealth, less leisure? Effect of housing wealth on tourism expenditure in China," Tourism Economics, , vol. 24(5), pages 526-540, August.
    17. Cristina Bernini & Maria Francesca Cracolici & Peter Nijkamp, 2020. "Micro and Macro Resilience Measures of an Economic Crisis," Networks and Spatial Economics, Springer, vol. 20(1), pages 47-71, March.
    18. Nguyen The Hien & Yen-Lun Su & Raksmey Sann & Le Thi Phuong Thanh, 2022. "Analysis of Online Customer Complaint Behavior in Vietnam’s Hotel Industry," Sustainability, MDPI, vol. 14(7), pages 1-15, March.
    19. Kristian Orsini & Vukašin Ostojić, 2018. "Croatia’s Tourism Industry: Beyond the Sun and Sea," European Economy - Economic Briefs 036, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    20. Bernini, Cristina & Cracolici, Maria Francesca, 2015. "Demographic change, tourism expenditure and life cycle behaviour," Tourism Management, Elsevier, vol. 47(C), pages 191-205.
    21. Athanasopoulos, George & Deng, Minfeng & Li, Gang & Song, Haiyan, 2014. "Modelling substitution between domestic and outbound tourism in Australia: A system-of-equations approach," Tourism Management, Elsevier, vol. 45(C), pages 159-170.
    22. Christer Thrane, 2016. "The Determinants of Norwegians' Summer Tourism Expenditure: Foreign and Domestic Trips," Tourism Economics, , vol. 22(1), pages 31-46, February.
    23. Alegre, Joaquín & Mateo, Sara & Pou, Llorenç, 2013. "Tourism participation and expenditure by Spanish households: The effects of the economic crisis and unemployment," Tourism Management, Elsevier, vol. 39(C), pages 37-49.
    24. Piekut Marlena, 2016. "Restaurants and hotels expenditure in Polish households of the elderly," Engineering Management in Production and Services, Sciendo, vol. 8(1), pages 80-90, March.

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