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Tourism Demand Analysis Using Structural Equation Modelling

Structural equation modelling is used to analyse quarterly tourist flow data from the UK to seven major destinations over the period 1978 to 1995, where the visit data are disaggregated into holiday, business and VFR categories. The objective is to determine which of the major explanatory variables, such as income, price, retail sales and manufacturing confidence, account for each of the disaggregated flows. Econometric structural equation modelling (LISREL) is used because it is capable of measuring a simultaneous relationship between several explanatory variables and several dependent variables, and also any relationship between the different dependent variables. Historically, tourism demand modelling has focused on total or holiday flows, without attempting to compare the determinants of tourism demand for different purposes of visit to specific destinations. However, an understanding of the differences and similarities in demand for different visit purposes is critical for industry planning. Different industry sectors cater for different types of tourists to varying degrees, and the influencing factors for each purpose of visit are unlikely to be the same.