Intertemporal demand for international tourist air travel

Abstract

This study investigated dynamic international tourism travel demand by constructing an intertemporal travel choice model. In the model, the utility functions comprise two factors: individuals’ ability to travel and external environmental factors in different years. Individuals are assumed to pursue a maximised aggregated utility, with various discounts on past and future years subject to time and budget constraints. A questionnaire was designed to calibrate and explore individuals’ preferences for international tourism travel from Taiwan. The study collected historic data over the past decade to estimate parameter values for the external environmental factor. The variables, such as travel budget, holiday and vacation days, travel expense and number of travel days are shown to significantly affect individual travel demand. The results support the argument that negative external events, such as an emerging influenza pandemic or economic crisis, have an adverse impact on international travel demand. Moreover, the utility of past travel experience declines at a slower rate than that of expected future travel. The findings imply that past travel experience has an unexpectedly strong impact on future travel decisions. The results also show that travellers tend not to travel until their saving budget has accumulated enough to cover travel expenses. Travellers with high incomes in Taiwan could undertake outbound international travel almost every year.

Keywords:

• intertemporal model
• time preference
• tourism demand

Acknowledgements

The authors would like to thank the National Science Council of the Republic of China for financially supporting this research under Contract No. NSC 98-2221-E-009-105-MY3 and NSC 99-2410-H-233-003.

Notes

Note

A t-test was applied to test the hypothesis to determine whether there is a significant linear relationship between independent variable x and dependent variables y and z in Equations (11a) and (11b). The t-statistic values for the constants in Equations (11a) and (11b) are 1674.1 and 19.7, while those for coefficients are 5.7 and 3.2, respectively, and are significant at the 5% level. The results imply that the variable x, i.e. year explains the variability of the external environmental factor and the number of outbound travellers.