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ABSTRACT
Australia is an increasingly important international holiday destination. Especially travel demand from Asia-Pacific countries has increased, which has led Australian policy-makers to believe the Asia-Pacific region will remain the largest growth market for holiday tourists. This article first presents an overview of the evolution and shifting geographical patterns of Asia-Pacific tourism to Australia between 1990 and 2010, and relies on this to explore the major determinants underlying these changes using a bootstrapped loglinear multiple regression analysis. Results indicate that income (GDP per capita) remains the most important factor explaining tourism demand, albeit that the Australian holiday market is becoming increasingly mature. Distance, as a proxy for travel costs, has large negative elasticity that has slightly increased over time as the effects of air transport liberalization have been off-set by oil prices’. The paper is concluded with an outlook on some possible opportunities and challenges for future tourism demand to Australia.
KEYWORDS:
Disclosure statement
No potential conflict of interest was reported by the authors.
Notes
1. Tourism GDP measures the total market value of goods and services produced in Australia which are consumed by visitors, less the cost of the inputs used in producing those goods and services. http://www.oecd.org/cfe/tourism/33649329.pdf
2. Tourism Australia, http://www.tourism.australia.com/statistics/tourism-2020.aspx
3. Tourism Australia, http://www.tourism.australia.com/markets/market-strategy.aspx
4. In this article, we focus on 21 Asian countries (determined by data availability) and New Zealand, and identify this as “Asia-Pacific” for shorthand purposes. One of the reviewers rightly pointed out that, as Pacific Islands are missing from the data, “Australasia” would be a more precise description of the geographical scope of our exercise. However, given the potential confusion over Australasian/Australia and the fact that the journal readership is above all interested in Asia-Pacific, we have chosen to retain this term.
6. Over 99% of international visitors travel to and from Australia by air (Bureau of Transport and Communications Economics [BTCE], Citation1992).
7. Although in certain cases also increases of air fares are detected after liberalization.
8. Air fares do not linearly increase with distance. Each flight has inherent fixed costs (aircraft use, ground handling, staff, … ), that make up a larger part of the total air fare for shorter trips. In contrast, the fuel costs as a percentage of the airline operating cost are higher for long- haul flights.
9. GDP in PPP is calculated by dividing a country's nominal GDP in its own currency by the PPP exchange rate. The PPP exchange rate comes from a calculation that starts with the PPP exchange reported by the ICP for years 2003–05, which is then extended backwards and forwards by the growth in relative GDP deflators https://www.imf.org/external/pubs/ft/weo/faq.htm#q4e
10. An international dollar has the same purchasing power over GDP as the U.S. dollar has in the United States.
11. The GDP has not been controlled for exchange rates
12. French Research Center in International Economics. The CEPII produces studies, researches, databases and analyses on the world economy and its evolution http://www.cepii.fr/CEPII/en/cepii/cepii.asp
13. (http://centreforaviation.com/analysis/australia-must-negotiate-expanded-bilateral-agreements-particularly-with-china-105159
14. We also experimented with a variable for the size of the middle income class and a dummy variable for the presence of Tourism Australia Agencies but they were not significant in our model.