Factors Affecting Demand and Supply in Tourism , 11: 14 Tourism in the modern world is ranked as the most efficient and largest economic activity that provides the highest level of added value.
In addition to this, it also affects indirectly and directly on cultural and economic activities. В While tourism on its own cannot facilitate development in a country, the arrival of tourists brings with it changes in facilities for transportation, accommodation and other kind of related activities.
There are three key players in the industry and they are as highlighted below:
In terms of economy, tourists are viewed as consumers and the behavior of the group in the market can be analyzed by demand and consumer theories within the economic sector. The purpose of tourism is having maximum satisfaction and utility of travel. Tourists are often faced with restrictions which include income limits, knowledge about the political and social constraints and objectives as well as time limit.
Tourism firms that are responsible for the supply of services and goods in the tourism sector and their objective is maximizing on profit by providing merchandize and services.
Agents and governments apply policies that help in maximizing tourism benefits. Host governments and the community also pursue non-economic and economic objectives.
Economists are in agreement that there are different factors (apart from price of tourism) that affect the demand
and supply in tourism. Ideally, some of these factors are as listed below:
ГјВ Income-The income of the tourists plats an important role in determining demand and consequently, this also affects demand. Whenever a group that is the source of major tourism goes into a period of recession, tourism drops significantly. Consequently, there is no demand for accommodation and other tourism related services.
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ГјВ Consumers tastes-For instance, there are instances when vacations go out of style especially if consumersВ believe it is farВ greener to stay at home rather than take a vacation to an exotic location. Because of this change, the demand for tourism also drops.
ГјВ Complementary goods costs-Those who think of air travel as a complementary good to the industry will realize when there is an increase in air travel price there is a decrease in tourism demand.
ГјВ Exchange rate-There are different national currencies and this creates a different in international economy. Tourists have to buy foreign currency so they can use it to buy goods and services when abroad. As such, when the price of foreign currency is high, the demand and supply in the sector changes because tourists end up spending less.
The decision on whether to go on vacation or not is dependent on numerous things such as the individuals economicВ freedom and position as well as external factors like fitness, time, money and freedom.
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