Date of Award

2010

Degree Type

Thesis

Degree Name

Doctor of Philosophy

School

School of Accounting, Finance and Economics

Faculty

Business and Law

First Advisor

Professor David Allen

Abstract

In 2007, the total spending by domestic visitors was AUD 43 billion, which was 1.5 times higher than the aggregate expenditure by international tourists in Australia. Moreover, domestic visitors consumed 73.7% of the Australian produced tourism goods and services whereas international tourists consumed 26.3%. Hence, this shows that domestic tourism is an important sector for the overall tourism industry in Australia. This present research determines the factors that influence domestic tourism demand in Australia and examines how changes in the economic environment in Australia could influence this demand. The main aim of this research is to achieve sustainability of domestic tourism businesses in Australia. In Chapters Two and Three, a review of the tourism demand literature is conducted. Most of the empirical papers argued that household income and travel prices are the main demand determinants. However, the literature has largely neglected other possible indicators, namely consumers‟ perceptions of the future economy, household debt and working hours, which may play an important role in influencing domestic tourism demand in Australia. The PhD thesis is divided into three parts. For the initial phase, a preliminary study is conducted using Johansen‟s cointegration analysis to examine the short- and long-run coefficients for the determinants of Australian domestic tourism demand. In the next section of this thesis, an alternative approach using panel data analysis to estimate the income and price elasticities of the demand is applied, as a panel data framework provides more information from the data and more degrees of freedom. In the final section, this thesis also investigates whether other factors (such as the consumer sentiment index, and measures of household debt and working hours) influence Australians‟ demand for domestic trips. This study reveals several distinct findings. First, the income elasticity for domestic visitors of friends and relatives (VFR) and interstate trips is negative, implying that Australian households will not choose to travel domestically when there is an increase in household income. In contrast, the study finds that the income variables are positively vi correlated with domestic business tourism demand, indicating that the demand is strongly responsive to changes in Australia‟s economic conditions. Second, an increase in the current prices of domestic travel can cause the demand for domestic trips to fall in the next one or two quarters ahead. Third, the coefficients for lagged dependent variables are negative, indicating perhaps, that trips are made on a periodic basis. Finally, to a certain extent, the consumer sentiment index, household debt and working hours have significant influences on domestic tourism demand. The current econometric analysis has significant implications for practitioners. A better understanding of income and travel cost impacts on Australian households‟ demand allows tourism companies to develop price strategies more effectively. Moreover, tourism researchers can use these indicators (such as measures of consumers‟ confidence about their future economy, household debt and working hours) to investigate how changes in these factors may have an impact on individual decisions to travel.

Previous Versions

Sep 20 2010

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