Original Research

Modelling tourism demand for South Africa: An almost ideal demand system approach

Andre Botha, Andrea Saayman
Journal of Economic and Financial Sciences | Vol 6, No 3 | a254 | DOI: https://doi.org/10.4102/jef.v6i3.254 | © 2018 Andre Botha, Andrea Saayman | This work is licensed under CC Attribution 4.0
Submitted: 26 June 2018 | Published: 31 October 2013

About the author(s)

Andre Botha, North West University, South Africa
Andrea Saayman, North West University, South Africa

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Abstract

This paper models tourism demand for South Africa from the UK and the USA, using an almost ideal demand system. An error-correction almost ideal demand system (EC-AIDS) is applied to quantify the responsiveness of UK and USA tourism demand for South Africa, relative to changes in tourism prices and expenditure or income. Short-term own-price, cross-price and expenditure elasticities are derived from the EC-AIDS models. One of the key findings of the paper is that tourism from the UK and USA is not sensitive to price changes in South Africa in the short term. Tourism to South Africa is found to be more income-elastic than price-elastic, indicating that the country is vulnerable to changing world economic conditions. Even though price competitiveness does not yet seem to be a key concern, significant substitution effects are present, with especially Spain and Malaysia benefiting from a decline in South Africa’s price competitiveness.

Keywords

tourism demand; almost ideal demand system; error-correction mechanism; South Africa

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Crossref Citations

1. Africa’s outbound tourism: An Almost Ideal Demand System perspective
Andrea Saayman, Armand Viljoen, Melville Saayman
Annals of Tourism Research  vol: 73  first page: 141  year: 2018  
doi: 10.1016/j.annals.2018.06.005