Domestic Tourism Demand of Urban and Rural Residents in China: Does Relative Income Matter?

Transcription

1 Jun 19, 2012 TTRA 2012 Conference, Virginia Beach, VA Domestic Tourism Demand of Urban and Rural Residents in China: Does Relative Income Matter? Yang Yang; Qiuyin Qi University of Florida Zehua Liu Nanjing University

2 Contents 1. Introduction 2. Literature Review 3. Data and Model 4. Results 5. Conclusion

3 Background Introduction The fast economic growth rapidly promotes domestic travel during the past decade. In order to stimulate domestic travel, the Golden Weeks were introduced in China Domestic Tourist Arrivals (in Million) Year Domestic Tourism Receipts (in Billion RMB)

4 Contribution Introduction An important attempt to fill this gap in Chinese domestic tourism literature. One of the first attempts to introduce relative income to study tourism demand. (capture the influence of social status/class) Applies multilevel models to analyze tourism demand, which allows for slope heterogeneity and interactions across different levels. Considers the urban-rural dichotomy in domestic tourism demand.

5 Contents 1. Introduction 2. Literature Review 3. Data and Model 4. Results 5. Conclusion

6 Literature Review Domestic tourism demand analysis Domestic tourism demand as a function of disposable income, tourism price and substitute price (Allen, Yap, & Shareef, 2009; Hamal, 1996; Seddighi & Shearing, 1997). Considerable variations in the estimated demand elasticities across countries. Domestic tourism demand in China Less rigorous analysis, and use city average income as the measure of income effect.

7 Literature Review Social status and tourism demand Conspicuous consumption - a type of consumption that is designed to signal the social position and status of each individual (Veblen, 1967). Tourism can communicate social status as it could be associated with higher personal income and more leisure time (Guo, Kim, & Timothy, 2007; Todd, 2001). To symbolize social status during tourism, tourists sometimes purchase luxury products and services (Park, Reisinger, & Noh, 2010) or consume fancy local foods (Kim, Eves, & Scarles, 2009).

8 Literature Review Social status and tourism demand Positional goods - the utility of possessing positional goods is derived not only from the absolute amount but also the relative amount. As argued by Urry (1990, 2003), the consumption of some modern tourism services can be regarded as positional goods. Some empirical studies have analyzed the degree of positionality of vacations by using survey-experimental methods (Carlsson & Johansson-Stenman, 2005; Solnick & Hemenway, 1998; Solnick, Hong, & Hemenway, 2007).

9 Contents 1. Introduction 2. Literature Review 3. Data and Model 4. Results 5. Conclusion

10 Multilevel model Data and Model 7 ( ) ln D 1 ln 2 ln k ijt i Pijt PSijt 3SARSt 4GWt it inc( k) ijt ijt k 2 (1) (2) i 0 i ( ) ( ) ( ) ( ) k k k 0 ln _ k it aver incit i, for k 2 to 7 (3) where i represents the level-2 unit, j represents resident individual, and t represents the year of observation. D is the annual domestic tourism expenditure per person. P is the tourism price index, PS is the substitute price index to tourism, SARS and GW are dummy variable of SARS outbreak and the Golden Week policy, respectively; aver_inc denotes the average disposable income over the city/province, inc(2) to inc(7) a set of dummy variables to capture income effects.

11 Parameters of interest Data and Model Price and substitute elasticities: 1 2 and The influence of SARS outbreak and Golden Week policy: and 3 4 Random effects over particular levels: and The interaction terms between individual income and ( k ) average income in the city/province: A negative estimated coefficient suggests the relative income effect. i ( k ) i

12 Data Data and Model From the National Household Tourism Survey ( ). Urban Resident Model Rural Resident Model Cont. Variable Mean Standard Deviation Number of Observations Mean Standard Deviation Number of Observations lnd lnp lnps lnaver_inc Cate. Variable Monthly Income (in RMB Yuan) Frequenc y Percent Annual Income (in RMB Yuan) Frequenc y Percent inc(1) ~ ~ inc(2) 500~ ~ inc(3) 1000~ ~ inc(4) 2000~ ~ inc(5) 3000~ ~ inc(6) 4000~ ~ inc(7) 5000~ ~

13 Contents 1. Introduction 2. Literature Review 3. Data and Model 4. Results 5. Conclusion

14 Results Urban resident model Variable Urban- Urban- Urban- All1 All2 All3 inc(2) 0.404*** 0.405*** 3.214** (0.0648) (0.0654) (1.628) inc(3) 0.664*** 0.693*** 2.467* (0.0733) (0.0624) (1.459) inc(4) 0.869*** 0.901*** 3.761*** (0.0800) (0.0694) (1.297) inc(5) 1.010*** 1.028*** 4.522*** (0.0735) (0.0687) (1.493) inc(6) 1.086*** 1.142*** (0.0866) (0.0822) (1.785) inc(7) 1.244*** 1.265*** (0.101) (0.0921) (1.854) lnp ** *** (0.703) (0.701) (0.902) lnps 0.930*** 0.940*** 1.123*** (0.309) (0.313) (0.357) SARS *** *** *** (0.0379) (0.0388) (0.0409) GW (0.0617) (0.0622) (0.0602) Variable Urban- Urban- Urban- All1 All2 All3 inc(2)*lnaver_inc * (0.184) inc(3)*lnaver_inc (0.165) inc(4)*lnaver_inc ** (0.145) inc(5)*lnaver_inc ** (0.165) inc(6)*lnaver_inc (0.196) inc(7)*lnaver_inc (0.204) SD(alpha) 0.362*** 0.419*** 0.412*** SD(inc(2)) 0.357*** 0.325*** SD(inc(3)) 0.341*** 0.324*** SD(inc(4)) 0.375*** 0.351*** SD(inc(5)) 0.371*** 0.350*** SD(inc(6)) 0.445*** 0.427*** SD(inc(7)) 0.500*** 0.486***

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16 Different periods Results The interaction terms are only estimated to be significant and negative over the period 2002 to Relative income did not play an important role until recently. Different areas Significant relative income effects in the East with a monthly income between 1,000 and 4,999 RMB Yuan. Less price sensitive in the East. SARS impact only found in the East.

17 Results Rural resident model Variable Rural-All1 Rural-All2 Rural-All3 inc(2) 0.250*** 0.271*** (0.0434) (0.0500) (1.291) inc(3) 0.318*** 0.330*** ** (0.0521) (0.0583) (0.992) inc(4) 0.352*** 0.371*** (0.0510) (0.0667) (1.809) inc(5) 0.458*** 0.482*** (0.0540) (0.0628) (1.036) inc(6) 0.597*** 0.612*** ** (0.0624) (0.0738) (1.719) inc(7) 0.936*** 0.849*** (0.0820) (0.0858) (1.758) lnp (0.390) (0.411) (0.398) lnps 1.636*** 1.622** (0.635) (0.635) (0.647) SARS (0.0370) (0.0359) (0.0325) Variable Rural-All1 Rural-All2 Rural-All3 inc(2)*lnaver_inc 0.286* (0.163) inc(3)*lnaver_inc 0.357*** (0.123) inc(4)*lnaver_inc (0.225) inc(5)*lnaver_inc (0.127) inc(6)*lnaver_inc 0.504** (0.212) inc(7)*lnaver_inc (0.216) SD(alpha) 0.256*** 0.328*** 0.342*** SDS(inc(2)) 0.244*** 0.269*** SD(inc(3)) 0.277*** 0.321*** SD(inc(4)) 0.323*** 0.357*** SD(inc(5)) 0.304*** 0.303*** SD(inc(6)) 0.358*** 0.381*** SD(inc(7)) 0.426*** 0.430***

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19 Different areas Results Demonstration effect is most significant for Central rural residents. For the West, the absolute income effects are larger for lower income groups and smaller for higher income groups.

20 Contents 1. Introduction 2. Literature Review 3. Data and Model 4. Results 5. Conclusion

21 Conclusion Summary of findings This paper breaks new ground by estimating the effect of relative income on determining domestic tourism demand Highlights the significant relative income effect on some urban residents tourism demand. Own price is estimated to be significant only for urban residents, while substitute price is significant for both urban and rural residents For both urban and rural residents, there is no statistical evidence to support the stimulation effect of the Golden Week policy on domestic tourism demand.

22 Conclusion Implications when making marketing plans to target potential tourists, relative income should be another important factor to be considered. different marketing strategies should be proposed for residents in different areas as well as residents in urban and rural areas. conditional on the fixed price, tourism products and services should be designed to be more status-signaling to satisfy the needs of urban residents, especially for urban residents in Eastern cities.

23 Thank you! Tourism Economic Database Of China (TEDOC)