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Investigating other leading indicators influencing Australian domestic tourism demand

Listed author(s):
  • Yap, Ghialy
  • Allen, David

In the tourism demand literature, much of the research focuses on income and price variables as demand determinants for travel. Nevertheless, the literature has neglected other possible indicators such as consumers’ perceptions of the future course of the economy, household debt and the number of hours worked in paid jobs. In fact, several studies found that these indicators could influence consumers in making decisions to travel. In this paper, we examine whether there are other indicators that can influence future Australian domestic tourism demand. The econometric model used in this study is a panel three-stage least squares (3SLS) model. Using the data on Australian domestic tourism demand, the empirical results reveal several points: first, it is found that the consumer sentiment index has significant impacts on VFR, but not on holiday tourism. Furthermore, the business confidence index has no influence on business tourism demand. The study also finds that an increase in household debt could encourage more Australians to travel domestically, indicating that Australians may consider increasing debt as their confidence to spend increases. Lastly, working hours have a statistically significant effect in the case of holiday tourism data.

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File URL: http://www.sciencedirect.com/science/article/pii/S0378475410001540
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Article provided by Elsevier in its journal Mathematics and Computers in Simulation (MATCOM).

Volume (Year): 81 (2011)
Issue (Month): 7 ()
Pages: 1365-1374

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Handle: RePEc:eee:matcom:v:81:y:2011:i:7:p:1365-1374
DOI: 10.1016/j.matcom.2010.05.005
Contact details of provider: Web page: http://www.journals.elsevier.com/mathematics-and-computers-in-simulation/

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  1. Naudé, Wim & Saayman, Andrea, 2005. "Determinants of tourist arrivals in Africa: a panel data regression analysis," MPRA Paper 16479, University Library of Munich, Germany.
  2. Sarah Gelper & Aurelie Lemmens & Christophe Croux, 2007. "Consumer sentiment and consumer spending: decomposing the Granger causal relationship in the time domain," Applied Economics, Taylor & Francis Journals, vol. 39(1), pages 1-11.
  3. Easaw, Joshy Z. & Heravi, Saeed M., 2004. "Evaluating consumer sentiments as predictors of UK household consumption behavior: Are they accurate and useful?," International Journal of Forecasting, Elsevier, vol. 20(4), pages 671-681.
  4. Harris, Richard D. F. & Tzavalis, Elias, 1999. "Inference for unit roots in dynamic panels where the time dimension is fixed," Journal of Econometrics, Elsevier, vol. 91(2), pages 201-226, August.
  5. Nenad Njegovan, 2005. "A leading indicator approach to predicting short-term shifts in demand for business travel by air to and from the UK," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 24(6), pages 421-432.
  6. Hultkrantz,L., 1995. "On Determinants of Swedish Recreational Domestic and Outbound Travel,1989-1993," Papers 7, Uppsala - Working Paper Series.
  7. Im, Kyung So & Pesaran, M. Hashem & Shin, Yongcheol, 2003. "Testing for unit roots in heterogeneous panels," Journal of Econometrics, Elsevier, vol. 115(1), pages 53-74, July.
  8. Gelper, S. & Lemmens, A. & Croux, C., 2007. "Consumer sentiment and consumer spending : Decomposing the granger causal relationship in the time domain," Other publications TiSEM 55ac7230-2985-41f1-a42c-7, Tilburg University, School of Economics and Management.
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