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Financial Implications of Seasonal Variability in Demand for Tourism Services (Final Draft)

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  • Tisdell, Clem

Abstract

Using Jensen’s inequality (and its mathematical generalization), this contribution shows how increased seasonal (periodic) variability of demand for tourism services can increase the annual profit of a tourism enterprise and the producers’ surplus of a corresponding competitive segment of the tourism industry experiencing this increased variability. It identifies conditions which result in these effects being magnified and takes account of the fact that a tourism business’ supply of services is often subject to capacity utilization constraints. A novel feature is that allowance is made for the possibility that variations in the market demand for tourism services may alter the prices of factors of production. Examples of seasonal variability in the prices for tourism services are provided. Furthermore, the importance of this contribution is related to the available scholarly literature about the financial consequences of seasonal variability in the demand for tourism services.

Suggested Citation

  • Tisdell, Clem, 2016. "Financial Implications of Seasonal Variability in Demand for Tourism Services (Final Draft)," Economic Theory, Applications and Issues Working Papers 244574, University of Queensland, School of Economics.
    • Handle: RePEc:ags:uqseet:244574
    DOI: 10.22004/ag.econ.244574
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    File URL: https://ageconsearch.umn.edu/record/244574/files/WP77.pdf
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    References listed on IDEAS

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    1. Harry Markowitz, 1952. "Portfolio Selection," Journal of Finance, American Finance Association, vol. 7(1), pages 77-91, March.
    2. Clem Tisdell & Serge Svizzero, 2004. "Globalization, Social Welfare, Public Policy And Labor Inequalities," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 49(02), pages 233-253.
    3. Chiang-Ming Chen & Kuo-Liang Chang, 2012. "Effect of Price Instability on Hotel Profitability," Tourism Economics, , vol. 18(6), pages 1351-1360, December.
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    Cited by:

    1. Serge Svizzero & Clement Tisdell, 2019. "Barter and the Origin of Money and Some Insights from the Ancient Palatial Economies of Mesopotamia and Egypt," Working Papers hal-02274856, HAL.
    2. Clement Tisdell & Serge Svizzero, 2019. "Economic Theory, Phoenician Pre-coinage External Trade, Changes in the Economic Surplus and its Appropriation - An initial Perspective," Working Papers hal-02274893, HAL.

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