Title

Interventions in Tourism Markets: A Comparison of the United States and Europe

Document Type

Presentation

Publication Date

Spring 2005

Abstract

This research analyzes the use of interventions in ARIMA models to capture the effects of significant events on tourism markets in the United States and Europe. Two tourist destinations are used for comparative purposes; Las Vegas Nevada and Palma de Mallorca. The time series variable in both series is air passenger traffic, via the major airport serving the tourist destination. More than 35 million tourists visit Las Vegas each year, 48% arrive by air travel. The data for Las Vegas covers the time period from December 1996 through August 2004. Las Vegas serves primarily a domestic United States market. Palma de Mallorca is a tourist destination in the Balearic Islands off the coast of Spain. Approximately 19 million tourists visit Mallorca each year, 99% arrive by air travel. Mallorca serves primarily European tourists with significant draw from Great Britain and Germany. The local government of Mallorca has changed parties twice during the period of this research. The Mallorca time series covers the period from December 1996 through December 2003, the last reported period as of the date of this research. During the time period studied a significant event negatively affected Las Vegas casino revenues, September 11, 2001 (Moss et. al. 2004). This research focuses on a related event, the decline in air traffic after September 11, 2001. The results from Las Vegas are compared to Mallorca to determine if European tourist destinations suffered similar problems after September, 2001. The findings show there is a significant intervention for 911 in the Mallorca series. However, much more dramatic and interesting interventions occur in the Mallorca series around tourist tax policy changes by the local government. The tax policy changes occur when the “green party” comes into power and is subsequently voted out of power in Mallorca. The results clearly show tourists reaction to the tax changes. The impact of the tax changes is shown to far outweigh any concerns over air travel after 911. The model used in this research is a Box-Jenkins ARIMA with multiple interventions required. The interventions in Las Vegas and Mallorca require different structural forms. This is a result of a surprise event for Las Vegas and both the unexpected event of 911 and expected events for tax policy changes effecting Mallorca. When the event is expected, e.g. the repeal of a tourist tax, interventions occur on both sides of the date of the tax repeal.

Sponsorship/Conference/Institution

Allied Academies International Conference

Location

Memphis, TN

Share

COinS