Modelling inbound international tourism demand in small Pacific Island countries

ABSTRACT

In this study, we estimate inbound international tourism demand models at the individual source market-destination and overall destination levels for Fiji, Cook Islands, Tonga and Vanuatu from 2002Q1 to 2016Q2 and Samoa from 2002Q4 to 2015Q3. Tourism demand is measured by visitor arrivals, tourism prices, the source country’s real GDP, tourism prices in substitute destinations, seasonality and structural breaks, all of which are considered plausible determinants. The models are estimated using the ARDL-bounds approach, structural breaks are identified using the Bai and Perron break test, and seasonality is tested using the US Census Bureau’s X-13 ARIMA-SEATS methodology. The study is important because it presents new evidence on price, income, and substitute price sensitivity, word of mouth, seasonality, and structural-breaks effects in Pacific island destinations.

KEYWORDS:

• Tourism demand
• Pacific island destinations
• seasonality
• structural breaks
• autoregressive distributed lags

JEL CLASSIFICATION:

• N77
• O56
• L83

Acknowledgement

The authors sincerely thank the Editor of Applied Economics and the reviewers for their comments and suggestions. Peter J. Stauvermann acknowledges thankfully the financial support of the Changwon National University Research Fund in 2018-2019 for his ongoing research participations. This research per se did not receive any form of financial support. The usual disclaimer applies.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ We thank an anonymous reviewer for highlighting this point.

² We thank an anonymous reviewer for highlighting this point.

³ See Data Appendix for the models used to extrapolate the respective series.

⁴ These results are not presented to conserve space but are available upon request.

⁵ WOM effects are derived from the levels ARDL model. The levels ARDL results are not presented to conserve space but are available upon request.

⁶ We thank an anonymous reviewer for highlighting this point.