M. Thea Sinclair

TOURISM CRISIS MANAGEMENT: US Response to September 11

Abstract Policymakers are faced with the predicament of if and how they should respond to an unexpected and sudden downturn in tourism demand. In the past, they have made these decisions in the absence of research into the relative effectiveness of different responses. The downturn in the United States following September 11 is a particularly vivid example of tourism crisis. This paper analyzes the effects of this crisis using a computable general equilibrium model of the US and also examines potential and actual policy responses to the crisis. Sector-specific targeted subsidies and tax reductions are found to be the most efficient means of handling the situation.

An econometric study of tourism demand: the AIDS model of US and European tourism in Mediterranean countries

The almost ideal demand system (AIDS) model was used to estimate tourism expenditure allocation by US and West European countries among a range of Mediterranean destinations. The approach has the advantage of an explicit basis in consumer expenditure theory and, by modelling the changes in the budget shares of expenditure among destinations, provides new information relative to that provided by the traditional single equation approach. The estimated model was econometrically satisfactory, although symmetry and homogeneity were rejected, in line with the findings of past studies of consumer demand. The expenditure elasticities demonstrated considerable differences in tourism demand preferences between origin countries, and between traditional and newly developing destinations. The own-and cross-price elasticities indicated the importance of effective prices in determining the allocation of expenditure among destinations.

Tourism and globalization: Economic Impact in Indonesia

Abstract The issue of whether globalization is beneficial remains controversial, particularly because globalization policies are often examined without consideration of their interactions with key sectors of the economy, notably tourism. This paper uses a computable general equilibrium model of the Indonesian economy to examine the effects of globalization via tariff reductions, as a stand-alone policy and in conjunction with tourism growth. The results show that tourism growth amplifies the positive effects of globalization and lessens its adverse effects. Production increases and welfare improves, while adverse effects on government deficits and the trade balance are reduced.

Tourism competitiveness: price and quality

The price competitiveness of tourism destinations is examined at the national level using the Almost Ideal Demand System model. The extent to which changes in the characteristics of package holidays in destinations contribute to a change in the price of the packages is then examined using hedonic pricing models. The results show that the price sensitivities of tourism demand vary considerably between destinations, so that monitoring relative price competitiveness is important. The characteristics that have significant effects on package prices are identified, assisting policy makers in their choice of which characteristics to enhance with a view to increasing the returns from tourism.

Quantifying the Impact of Foot and Mouth Disease on Tourism and the UK Economy

The foot and mouth disease (FMD) outbreak significantly reduced tourism expenditures in the UK, as well as affecting the agricultural sector. This paper quantifies the effects of FMD on tourism, agriculture and all other sectors of the UK economy using a computable general equilibrium (CGE) model of the UK economy. The results show that the FMD outbreak had larger adverse effects on GDP through reductions in tourism expenditures than through other effects. The implication for policy makers is that the roles of tourism-related sectors should be considered in the formulation of agricultural policy.

Market shares analysis: the case of French tourism demand.

Abstract This paper examines the magnitudes and determinants of changes in destinations’ shares of a major tourist origin market. The Almost Ideal Demand System model is used to quantify the responsiveness of French tourism demand in Italy, Spain, and the United Kingdom to changes in relative prices, exchange rates, tourists’ expenditure budget, and external events. The results indicate that effective price competitiveness is a key variable driving changes in market shares. Policymakers who wish to maintain their shares of the French market should pay particular attention to tourism pricing policies, as well as to improving the tourism offer.

Quantifying the Effects of Tourism Crises: An Application to Scotland

SUMMARY Effective crisis management requires information about the ways in which tourists of different nationalities respond to different types of crisis. This paper provides a model which can be used to quantify such effects. The model is applied to the case of American, French and German tourism demand in Scotland. The results show that French tourists were particularly affected by the foot and mouth disease crisis. Germans were most severely affected by the September 11 events. Although arrivals from the USA decreased after both crises, receipts were hardly affected.

International tourism and export instability

Export diversification has been suggested as a strategy for decreasing the level of export earnings instability which is experienced by many developing countries. In recent years the international tourism sector has made an increasingly important contribution to the economies of many low income countries. This article examines whether diversification into the non‐traditional tourism sector has succeeded in decreasing the instability of export earnings. It was found that although tourism has the advantage of high growth rates and is a major source of foreign currency receipts, earnings from international tourism did not bring about a significant decrease in the instability of export earnings of most of the developing and industrialised countries considered. Furthermore, a net increase in the instability of earnings from tourism and merchandise exports occurred in a number of countries, and may be a particular problem in small, open developing economies.

Commodity Taxation in the Presence of Tourists

This paper investigates the welfare effect of commodity taxation on the presence of tourists. Higher demand from tourists increases tax revenue, and hence welfare, but on the other hand, the reduction in their consumer surplus is not accounted for in domestic welfare. Hence, the presence of tourists causes a lower deadweight cost of taxation. Two main scenarios are investigated. In the first, the authors raise the tax rate on commodities with a tourism demand component. It is found that the welfare level can increase if tourism demand is high enough and/or tourism demand is more inelastic than domestic demand. In the second scenario, tourism demand is increased for commodities which are already taxed and it is found that welfare always increases. Both scenarios are investigated under the fixed and the variable producer price assumption and, in the latter case, a high price elasticity of supply tends to generate positive welfare change.

Trade Effects of European Union Enlargement: an ex post model of trade between Spain and Latin America

Past research on European Union (EU) enlargement has tended to neglect the effects on trade with non-preferred trading partners. This paper examines the consequences of EU enlargement on trade between Spain and the Latin American countries with which it has traditional economic and cultural ties. An important demand functions model was estimated for the period 1964-93. The country-level results showed that Spanish accession to the EU only had large adverse effects on its imports from Argentina. The results for non-agricultural products indicated a general absence of negative effects on Spanish imports. The aggregate results from the ex post model provide support for some, but not all, of the ex ante predictions of previous studies.