Macroeconomic Determinants of Tourism Demand Toward Emerging Markets

Year 2023, Volume: 73 Issue: 2, 837 - 864, 30.12.2023

Burak Darıcı , Ahmet Aydın , Fatih Ayhan , Merve Altaylar

https://doi.org/10.26650/ISTJECON2023-1296548

Abstract

This research provides valuable insights into the intricate dynamics influencing tourism demand in Turkey. By delving into the relationships between transportation costs, tourists’ income levels, prices, the COVID-19 pandemic, and exchange rates, the study sheds light on the multifaceted nature of the tourism industry. The findings underscore the significance of various factors in shaping the tourism demand. Transportation costs and exchange rates are identified as critical determinants, exerting adverse effects on tourism demand. Higher transportation costs and unfavorable exchange rates can deter potential tourists However, income and prices emerged as positive influencers of tourism demand, suggesting that higher incomes and favorable price levels can stimulate tourist activity. The study’s investigation of causal relationships through advanced statistical techniques revealed valuable insights. The unidirectional causality from transportation costs and income to tourism demand highlighted the pivotal role of these factors in driving tourist behavior. Additionally, the causal relationship between prices and the exchange rate signifies the interplay between economic conditions and pricing strategies in shaping tourism demand. Overall, this research provides a deeper understanding of the complex dynamics in the Turkish tourism market, offering valuable insights for industry stakeholders and policymakers alike.

JEL Classification : C13 , C33 , L83 , Z30

Keywords

Tourism demand, Price levels, Exchange rate, Income, Transportation costs, Panel data, Poisson-Negative binomial regression, Panel causality

References

• Akis, S. (1998). A compact econometric model of tourism demand for Turkey, Tourism Management. 19 (I), 99-102. google scholar
• Akova, O., Sarıışık, M. & Dönmez, D. (12-14 October 2011). Strategies for tourism industry under the global economic crisis: a SWOT analysis for Turkish tourism. International Conference on Eurasian Economies, Kyrgyzstan, 382-389. google scholar
• Alegre, J., & Pou, L. (2006). The length of stay in the demand for tourism, Tourism Management. 27, 1343-1355. google scholar
• Allen, D., Yap, G., & Shareef, R. (2009). Modelling interstate tourism demand in Australia: A cointegration approach. Mathematics and Computers in Simulation, 79, 2733-2740. google scholar
• Assaf, A.G.; Li, G.; Song, H.; & Tsionas, M.G. (2019). Modeling and forecasting regional tourism demand using the bayesian global vector autoregressive (BGVAR) model, Journal of Travel Research. 58(3), 383-397. google scholar
• Ayhan, F. (2019). The analysis for the impacts of exchange rate volatility on the Turkish economy’s foreign trade, Business and Economics Research Journal. 30(3), 629-647. google scholar
• Baltagi, B.H. (2008). Econometric analysis of panel data. Chichester, UK: Fourth ed. John Wiley and Sons. google scholar
• Baltagi, B. H. (2013). Econometric analysis of panel data. Chichester, UK: Fifth ed. John Wiley & Sons. google scholar
• Bianchi, G., and Che, Y. (2020). The short and long-run hotel demand in Switzerland: A weighted macroeconomic approach, Journal of Hospitality & Tourism Research. 44(5), 835-857. google scholar
• Breusch, T. S., & Pagan, A. R. (1980). The lagrange multiplier test and its applications to model specification in econometrics, The Review of Economic Studies. 47(1), 239-253. https://doi. org/10.2307/2297111 google scholar
• Brida, J.G., & Risso, W.A. (2009). A dynamic panel data study of the German demand for Tourism in South Tyrol, Tourism and Hospitality Research. 9, 305-313. google scholar
• Cameron, A.C. & Trivedi, P.K. (1998). Regression analysis of count data. New York: Cambridge University Press. google scholar
• Cheng, K.M. (2012). Tourism demand in Hong Kong: income, prices, and visa restrictions, Current Issues in Tourism. 15(3), 167-181. google scholar
• Crepon, B., Duguet, E. & Mairesse, J. (1998). Research innovation and productivity: an econometric analysis at firm level, NBER Working Paper. 6696. Cambridge, MA, p. 02138. google scholar
• Crouch, G. (1995). A meta-analysis of tourism demand, Annals of Tourism Research. 22(1), 103-118. google scholar
• Demirhan, E. & Demirhan, B. (2015). The dynamic effect of exchange- rate volatility on Turkish exports: parsimonious error-correction model approach, Panoeconomicus. 62(4), 429-451. google scholar
• Divisekera, S. & Kulendran, N. (2006). Economic effects of advertising on tourism demand: a case study, Tourism Economics. 12(2), 187-205. google scholar
• Dritsakis, N. (2004). Cointegration analysis of German and British tourism demand for Greece, Tourism Management. 25(1), 111-119. google scholar
• Dritsakis, N., & Spiros, A. (2000). An econometric model of tourist demand: the case of Greece, Journal of Hospitality & Leisure Marketing. 7(2), 39-49. http://dx.doi.org/10.1300/J150v07n02_03. google scholar
• Dumitrescu, E.I., & Hurlin, C. (2012). Testing for granger non-causality in heterogeneous panels, Economic Modelling. 29(4), 1450-1460. google scholar
• Durbarry, R. & Sinclair, T.M. (2003). Market shares analysis the case of French tourism demand, Annals of Tourism Research. 30(4), 927-941. google scholar
• Eurostat (2021a). Consumer Price Indices. Accessed at http://ec.europa.eu/eurostat/web/hicp/ data/ database (accessed October 14, 2021). google scholar
• Eurostat (2021b). National Accounts. Accessed at http://epp.eurostat.ec.europa.eu/portal/page/ portal/statistics/search_database (accessed October 14, 2021). google scholar
• Federal Reserve Bank of St. Louis (2021). Economic data-consumer price index of all items index 2010=100, Economic Research Division. Accessed at http://research.stlouisfed.org/fred2 (accessed October 17, 2021). google scholar
• Martins, L.F., Yi, G. & Alexandra, F.L. (2017). An empirical analysis of the influence of macroeconomic determinants on world tourism demand, Tourism Management. 61, 248-260. google scholar
• Fourie J., Rossell’o-Nadal J. & Santana-Gallego, M. (2019). Fatal attraction: how security threats hurt tourism, Journal of Travel Research. 58, 1-11. google scholar
• Gasmi, A., & Sassi, S. (2015). International tourism demand in Tunisia: evidence from dynamic panel data model, Economics Bulletin. 35(1), 507-518. google scholar
• Granger, C.W. (1969). Investigating causal relations by econometric models and cross-spectral methods, Econometrica: Journal of the Econometric Society. 37(3), 424-438. google scholar
• Greene, W. (2008). Econometric Analysis. New Jersey: sixth ed. Pearson International Edition. google scholar
• Habibi, F., & Rahim, K.A. (2009). A bound test approach to cointegration of tourism demand, American Journal ofApplied Sciences. 6(11), 1924-1931. google scholar
• Hadri, K. (2000). Testing for stationarity in heterogeneous panel data. The Econometrics Journal. 3(2), 148-161. https://doi.org/10.1111/1368-423x.00043 google scholar
• Hadri, K., & Kurozumi, E. (2012). A simple panel stationarity test in the presence of serial correlation and a common factor, Economics Letters. 1 15, 31-34. https://doi.org/10.1016/j. econlet.2011.11.036 google scholar
• Henseler, M., Maisonnave, H.& Maskaeva, A. (2021). Economic impacts of covid-19 on the tourism sector in Tanzania, Working Papers hal-03501722. HAL. google scholar
• Huyugüzel Kışla, G. Ş., Türkcan, B. & Ince Yenilmez, M. (2023). How covid-19 has affected supply and demand within tourism industry, Journal of Multidisciplinary Academic Tourism. 8(1), 39-49. google scholar
• Im, K. S., Pesaran, M. H., & Shin, Y. (2003). Testing for unit roots in heterogeneous panels, Journal of Econometrics. 115(1), 53-74. https://doi.org/10.1016/S0304-4076(03)00092-7 google scholar
• Jintanee, J., Sriboonchitta, S., Calkins, P. & Chaiboonsri, C. (2011). Thailand’s international tourism demand: seasonal panel unit roots and the related cointegration model, Review of Economics & Finance. 1, 63-76. google scholar
• Kulendran, N. & Witt, S.F. (2001). Cointegration versus least squares regression, Annals of Tourism Research. 28(2), 291-311. google scholar
• Lejarraga, I., & Walkenhorst, P. (2013). Economic policy, tourism trade and productive diversification. International Economics, 135, 1-12. google scholar
• Levin, A., Lin, C. F., & Chu, C. S. J. (2002). Unit root tests in panel data: asymptotic and finite-sample properties, Journal of Econometrics. 108(1), 1-24. https://doi.org/10.1016/S0304-4076(01)00098-7 google scholar
• Lim, C. (1997). Review of international tourism demand models, Annals of Tourism Research. 24(4), 835-849. google scholar
• Lim, C., & McAleer, M. (2000). A seasonal analysis of Asian tourist arrivals to Australia, Applied Economics. 32(4), 499-509. google scholar
• Lim, C., & McAleer, M. (2002). Time series forecasts of international travel demand for Australia, Tourism Management. 23, 389-396. google scholar
• Meo, M.S., Chowdhury, M.A.F., Shaikh, G.M., Ali, M. & Sheikh, S.M. (2018) Asymmetric impact of oil prices, exchange rate, and inflation on tourism demand in Pakistan: new evidence from nonlinear ARDL, Asia Pacific Journal of Tourism Research. 23(4), 408-422, doi: 10.1080/10941665.2018.1445652 google scholar
• Munoz, G.T. (2007). German demand for tourism in Spain, Tourism Management. 28, 12-22. google scholar
• Nadal, J.R. & He, J. (2020). Tourist arrivals versus tourist expenditures in modelling tourism demand, Tourism Economics. 26(8), 1311-1326. google scholar
• O’Connell, P. (1998). The overvaluation of purchasing power parity, Journal of International Economics. 44, 1-19. google scholar
• OECD (2021a). Main Economic Indicators-Complete Database. Main Economic Indicators (database), Accessed at http://www.oecd-ilibrary.org/economics/data/main-economic-indicators/main-economic-indicators-complete-database_data-00052-en (accessed October 14, 2021). google scholar
• OECD (2021b). Aggregate National Accounts: Gross Domestic Product. OECD National Accounts Statistics (database), Accessed at: http://www.oecd-ilibrary.org/economics/data/aggregate-national-accounts/gross-domestic-product_data-00001-en (accessed October 14, 2021). google scholar
• OECD (2021c). National Income. Accessed at http://stats.oecd.org/Index.aspx?DataSetCode= SNA_ TABLE2 (accessed October 14, 2021). google scholar
• Ouerfelli, C. (2008). Cointegration analysis of quarterly European tourism demand in Tunisia, Tourism Management. 29, 127-137. google scholar
• Petrovic, P., & Gligoric, M. (2010). Exchange rate and trade balance: j-curve effect, Panoeconomicus. 1, 23-41. Doi: 10.2298/PAN1001023P google scholar
• Republic of Turkey Ministry of Culture and Tourism. 2022. “General Tourism Statistics for 2021.” http:// yigm.kulturturizm.gov.tr/TR-232959/arastirma-ve-raporlar.html (accessed March 12, 2022). google scholar
• Pesaran, M. H. (2004). General diagnostic tests for cross section dependence in panels, Cambridge Working Papers, Economics. 1240(1), 1. google scholar
• Pesaran, M. H. (2007). A simple panel unit root test in the presence of cross-section dependence, Journal of Applied Econometrics. 22, 265-312. https://doi.org/10.1002/jae google scholar
• Pesaran, M. H., Ullah, A., & Yamagata, T. (2008). A bias-adjusted LM test of error cross-section independence, Econometrics Journal. 11(1), 105-127. https://doi.org/10.1111/j.1368-423X.2007.00227.x google scholar
• Salleh, H.M.N., Othman, R. & Ramachandran, S. (2007). Malaysia’s tourism demand from selected countries: the ARDL approach to cointegration, International Journal of Economics and Management. 1(3), 345-363. google scholar
• Schiff, A., & Becken, S. (2011). Demand elasticity estimates for New Zealand tourism, Tourism Management. 32, 564-575. google scholar
• Shafiullah, M.O. Emeka, O.L. & Usman, K. (2019). Determinants of international tourism demand: evidence from Australian states and territories, Tourism Economics. 25(2), 274-296. google scholar
• Sharma, C. and Pal, D. (2020). Exchange rate volatility and tourism demand in India: unraveling the asymmetric relationship, Journal of Travel Research. 59(7), 1282-1297. google scholar
• Song, H., Li, G., Witt, S.F., & Baogang, F. (2010). Tourism demand modelling and forecasting: how should demand be measured?, Tourism Economics. 16 (1), 63-81 google scholar
• Song, H., Gao, B.Z., & Lin, V.R. (2013). Combining statistical and judgmental forecasts via a web-based tourism demand forecasting system, International Journal of Forecasting. 29(2), 295-310. google scholar
• Tang, J., Sriboonchitta, S., Ramos, V. & Wong, W.-K. (2016). Modeling dependence between tourism demand and exchange rate using the copula-based GARCH model, Current Issues in Tourism. 19(9), 876-894. google scholar
• Tatoğlu, F.Y. & Gül, H. (2020). Analysis of tourism demand using a multi-dimensional panel gravity model, Tourism Review. 75(2), 433-447. google scholar
• Tavares, J.M. & Leitao, N.C. (2017). The determinants of international tourism demand for Brazil, Tourism Economics. 23(4), 834-845. google scholar
• The Bulgarian National Bank (2021). Macroeconomic Indicators. Accessed at http://www.bnb.bg/ Statistics/index.htm (accessed October 14, 2021). google scholar
• The Central Bank of The Russian Federation (2021). Consumer Price Index: All Items. Accessed at http://www.cbr.ru/eng/ (accessed October 14, 2021). google scholar
• The European Central Bank (2021). Statistical Data Warehouse. Accessed at http://sdw.ecb.europa. eu/ (accessed October 14, 2021). google scholar
• The National Bank of Georgia (2021). Consumer Price Index. Accessed at https://www.nbg.gov.ge/ index.php?m=306 (accessed October 13, 2021). google scholar
• The U.S. Energy Information Administration-EIA (2021). Imported Crude Oil Price (real, $/barrel). Accessed at http://www.eia.gov/forecasts/steo/realprices/real_ prices.xlsx (accessed August 13, 2021). google scholar
• The World Bank (2021). Global Economic Monitor. Accessed at http://data.worldbank.org/ data-catalog/global-economic-monitor (accessed October 13, 2021). google scholar
• Travelmath (2021). Distance Calculator. Accessed at http://www.travelmath.com/distance/ (accessed November 19, 2021). google scholar
• TUIK (2022). Turkish Statistical Institute Tourism Statistics: The Number of Foreigners Arriving in Turkey by Nationalities According to Term. Accessed at http://tuikapp.tuik.gov.tr/turizmapp/ menuturizm.zul (accessed March 12, 2022). google scholar
• Tunçsiper, Ç., & Horoz, İ. (2023). The effect of exports on economic growth Türkiye 1980-2021, Journal of Emerging Economies and Policy. 8(1), 65-72. google scholar
• Ulucak, R., Yücel, A.G. & İlkay, S.C. (2020). Dynamics of tourism demand in Turkey: panel data analysis using gravity model, Tourism Economics. 26(8), 1394-1414. google scholar
• UNCTAD (2013). United Nations Conference on Trade and Development-UNCTAD Handbook of Statistics 2013. New York: UN Publications. google scholar
• UNWTO (2021). United Nations World Tourism Organisation Tourism Highlights 2020 Edition. Accessed at http://dtxtq4w60xqpw.cloudfront.net/sites/all/files/pdf/unwto_ highlights14_en. pdf (accessed Mar 5, 2022). google scholar
• UNWTO (2022). World Tourism Barometer. Accessed at https://www.e-unwto.org/loi/ wtobarometereng (accessed March 5, 2022). google scholar
• Vanegas, M.S. (2009). Tourism demand response by residents of Latin American countries, International Journal of Tourism Research. 11, 17-29. google scholar
• Wang, Y. (2009). The Impact of crisis events and macroeconomic activity on Taiwan’s international inbound tourism demand, Tourism Management. 30, 75-82. google scholar
• Webber, G.A. (2001). Exchange rate volatility and cointegration in tourism demand, Journal of Travel Research. 39(4), 398-405. google scholar
• Westerlund, J. (2008). Panel cointegration tests of the fisher effect, Journal of Applied Econometrics. 23(2), 193-233. https://doi.org/10.1002/jae google scholar
• Witt, F.S., & Witt, C. (1995). Forecasting tourism demand: a review of empirical research, International Journal of Forecasting. 11(3), 447-475. google scholar
• Yamaura, K., & Thompson, A. (2015). Analysis of tourism demand model across European source countries, Tourism Planning & Development. 12(2), 145-154. Doi:10.1080/21568316.2014.925487 google scholar
• Yazdi, S.K. & Khanalizadeh, B. (2017). Tourism demand: a panel data approach, Current Issues in Tourism. 20(8), 787-800, doi: 10.1080/13683500.2016.1170772 google scholar