Think of this assignment as chapter two and three of your research paper. Only submit the Literature review and Proposal (Do not include your Introduction and methodology - especially the references for those sections).

INTRODUCTION

Identify the major objectives? Usefulness of the study (page 1860)?

· To discuss tourism demand analysis based on two frameworks: the economic framework and the socio-psychological framework. Specifically, the limitations of the economic framework in explaining tourism demand are revealed.

· To propose a combined framework that takes into account both the economic and socio-psychological frameworks and is capable of explaining tourism demand.

· To build a tourism demand model based on concepts proposed in a combined framework by including one of the major socio-psychological variables—climate into the analysis.

· Note that the study does not intend to investigate all possible socio-psychological factors. Instead, it aims to illustrate the concept of the combined framework by incorporating the climate factor into the traditional tourism demand analysis using an error correction model.

How this study is different from existing literature?

· In almost all of the tourism demand literature, tourism demand has been analyzed on the basis of conventional economic theory, i.e., utility theory and consumption behavioral theory.

· Both theories suggest that economic factors such as income, price, substitute price, advertising, and supply constraints are the primary factors affecting demand.

· In contrast, non-economic factors such as psychological, anthropological, and sociological factors have not been analyzed in studies of travel demand.

· Although many investigations in the tourism literature show how these non-economic factors affect travel motivation and how travel motivation in turn affects destination choices, the existing literature has largely failed to show how these non-economic factors affect the demand for travel.

· The study conducts both tourism demand analysis and forecasting on the basis of economic and non-economic variables.

TOURISM DEMAND FRAMEWORK

· Illustrate conventional tourism demand models in literature, identify limitations

· Both economic and non-economic factors are important. Literature considering non-economic factors is scarce (due to data problem)

· Difficult to identify properties and characteristics of goods and services

· Developed a tourism demand model with socio-psychological factors (discuss figure 1-3)

CLIMATE AND TOURISM

· Climate-a major determinant behind tourism demand

· Destination image, variability of climate

Read this section in detail

RESEARCH METHOD

· Error correction model-Discuss in detail . Try to interpret the findings in policy context

· Read through the model- Eq 1 both dependent and explanatory variables (on page 1872).

· Climate is employed as a separate variable explaining travel demand using a tourism climate index (TCI) (equation 2).

· Brifly summarize the travel demand model in equation 3 (page 1874).

DATA ANALYSIS AND EMPIRICAL RESULTS

· Follow the major findings from Table 1 and 2. No need to memories the numbers. Try to identify signs and significance.

· Some results highlights

· The income variable is significant for the US model, confirm the generally accepted view that an overseas holiday is a luxury item. Elasticity of larger than one suggesting

that travel to Hong Kong is of a luxurious good for US residents.

· The trade variable is significant for US, JP and CN indicating strong commercial ties between these countries and Hong Kong.

· Two event dummies, SARS and Asian Financial Crisis (FC) yield expected and significant results.

· However, the 911 terrorist attacks, which is expected to adversely influence travel motivation of the US residence does not significantly affect US arrivals to Hong Kong.

· The Asian Financial Crisis reduced arrivals.

· As expected, the climatic index is found to have positive sign for all the four series and are highly significant either at 1 percent level (for US) or 5 percent level (for UK, JP and CN).

WHAT ARE THE MAJOR CONCLUSIONS?

· This study is aimed at moving beyond the orthodox tourism demand framework to include more important factors—both economic and non-economic—in the analysis.

· The socio-psychological variable of climate is found to be a significant determinant of tourism demand for all four tourism markets investigated in this study.

· The significance of climate as a socio-psychological variable n turn suggests the possibility that other qualitative factors also affect tourism demand; tourism demand planning should go beyond examination and analysis of the traditional economic factors.

· It is suggested that future studies extend the tourism demand framework by including other important factors that could enhance the understanding of demand relationships and improve the predictability of tourism demand.

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