Abstract
This chapter analyzes the international tourism demand at Spanish Mediterranean area. This destination receives the highest number of international arrivals in Spain. A dynamic econometric model is built following the Tourism Area Life Cycle (TALC) theory. Unlike other dynamic tourism demand models, our specification allows that the reputation and persistence effect (the effect of the lagged demand on current tourism demand) not to be constant. We estimate the model using panel data consisting of the 11 provinces which make up the Spanish Mediterranean area, and the 7 European countries which are the main origin markets, for the period 2001–2015. The results show a strong persistence in tourism demand. Furthermore, the reputation and persistence effect is positive and decreasing with the ratio between tourists and carrying capacity of the destination. Thus, this effect is not constant but varies across provinces and over time.
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Notes
- 1.
Although tourism carrying capacity has traditionally been considered as a static value, several authors argue that it can be subject to change (Saveriades 2000; Cole 2012; Albaladejo and Martínez-García 2015). Carrying capacity could evolve over time due to changes in tourists’ preferences, tourism supply, or the evolution of environmental or social restrictions. Moreover, destinations can expand their capacity simply by rejuvenating the products and services, by investing in developing new ones, opening up to new markets or improving the communication infrastructures.
- 2.
Note that the most common dynamic specification set β2 = 0, omitting the quadratic term \( \frac{T_{t-1}^2}{CC_{t-1}} \). In the resulting linear model, the marginal effect is constant.
- 3.
The nominal exchange rate between Spain and Eurozone countries is equal to 1. Therefore, we only need to multiply the CPI of the origin country by the nominal exchange rate in the case of United Kingdom.
- 4.
The data of hotel beds correspond to beds available in the month of August of each year.
- 5.
One-step GMM estimator is based on the assumption that the εij,t are i.i.d. In this chapter, we use one-step robust estimators, where the resulting standard errors are consistent with panel-specific autocorrelation and heteroscedasticity.
- 6.
The Hansen statistics is a chi-squared test to determine if the residuals are correlated with the instrument variables. If non-sphericity is suspected in the errors, the Hansen over identification test is theoretically superior to the Sargan (1958) test.
- 7.
The value of reputation and persistence effect has been calculated using the estimated coefficients shown in the third column of Table 12.3. For each province, the reputation effect is the average of the calculated effects for tourists arriving from different origin countries.
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Acknowledgement
The first author (Isabel Albaladejo) has been partially funded by the Spanish Government under research project ECO2016-76178-P. This project is cofinanced by FEDER funds.
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Albaladejo, I.P., González-Martínez, M.I. (2019). Non-constant Reputation Effect at Spanish Mediterranean Destinations. In: Kozak, N., Kozak, M. (eds) Tourist Destination Management. Tourism, Hospitality & Event Management. Springer, Cham. https://doi.org/10.1007/978-3-030-16981-7_12
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