Tourism Demand Elasticity Modeling

Tourism demand elasticity modeling estimates how responsive tourist demand is to changes in its key drivers, above all source-market income and the price of travel. The income elasticity measures the percentage change in demand for a one-percent change in income, and the price elasticity does the same for price; both are recovered as coefficients in econometric demand models, most simply a log-linear regression where the coefficients read directly as elasticities. Geoffrey Crouch's mid-1990s surveys of the international tourism demand literature consolidated decades of such estimates, showing that tourism is typically income-elastic — a luxury that grows faster than income — and price-sensitive, with values that vary systematically across markets and methods. Later meta-analyses, such as Peng, Song, Crouch, and Witt's, quantified that variation across hundreds of studies.