Estimating International Tourism Demand to Spain Separately by the Major Source Markets

Resumo

The objective of this paper is to estimate international tourism demand to Spain separately by major source markets (Germany, United Kingdom, France, Italy and The Netherlands) that represent 67% of the international tourism to Spain. In order to investigate how the tourism demand reacts to price and income changes, we apply the bounds testing approach to cointegration and construct confidence intervals using the bootstrap technique. The results show differences in tourism behavior depending on the countries of origin and corroborate the necessity of analyzing the source markets separately instead of focus on the estimation of a unique tourism demand from a number of countries to Spain.The number of overnight stays is more sensitive to income level in the source markets than to changes in the price levels. Income is the critical determinant of demand. International tourism behaves as a luxury good for visitors from each country of origin. The negative sign of price also corroborates the economic theory. Tourists from Germany and the Netherlands are more sensitive to income changes than citizens from Italy and the United Kingdom. Citizens from the last country react inelastic to price changes and the result is in line with previous studies that have analysed the outbound tourism demand in the United Kingdom.