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Modelling International Tourism Demand for the Caribbean

Author

Listed:
  • Olugbenga A. Onafowora

    (Economics Department, Susquehanna University, Selinsgrove, PA 17870, USA)

  • Oluwole Owoye

    (Department of Social Sciences/Economics, Western Connecticut State University, Danbury, CT 06810, USA)

Abstract

This paper provides models of international tourism demand for four destination countries (the Bahamas, Barbados, Jamaica and St Lucia) in the Caribbean region, where visitor arrivals are mainly from Canada, Germany, the UK and the USA. The authors use a less restrictive econometric technique – the autoregressive distributed lag (ARDL) bounds test – to test for cointegration among the variables in the tourism demand equations. The empirical results from the bounds test indicate the existence of a unique long-run relationship between tourist arrivals, per capita real income, tourism prices and transport costs. The estimated results show that changes in tourists' income, tourism prices, travel costs, the 9/11 2001 terrorist attacks on the USA and the 2003 US–Iraq War significantly affect tourists' travel decisions. The results also show that tourism demand for Caribbean destinations is highly income elastic in both the short run and the long run, but relatively price inelastic in both periods. The price inelasticities suggest that if policy makers and/or tourism stakeholders increase the prices of the tourism products and services, this would not decrease the number of tourist arrivals proportionally but would increase total tourism receipts or revenues. Overall, the CUSUM and CUSUMSQ stability tests reveal that the parameters of the international tourism demand models are stable and, as such, they can be used for policy analysis and forecasting.

Suggested Citation

  • Olugbenga A. Onafowora & Oluwole Owoye, 2012. "Modelling International Tourism Demand for the Caribbean," Tourism Economics, , vol. 18(1), pages 159-180, February.
    • Handle: RePEc:sae:toueco:v:18:y:2012:i:1:p:159-180
    DOI: 10.5367/te.2012.0102
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    References listed on IDEAS

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    Cited by:

    1. Mingming Hu & Haiyan Song, 2020. "Data source combination for tourism demand forecasting," Tourism Economics, , vol. 26(7), pages 1248-1265, November.
    2. Santiago Grullón, 2013. "Effects of Price and Income on International Travel to the Dominican Republic: Co-integration and Causality Results," Journal of Empirical Economics, Research Academy of Social Sciences, vol. 1(4), pages 107-114.

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