Factors Affecting Demand and Supply in Tourism

The understanding of demand and supply in tourism depends on your geographical, economical, political and psychological perspective. From a geographical point of view, demand for tourism refers to the number of people traveling or wish to travel and utilize tourist facilities away from their locality such as place of work or residence. According to the 1980 Manila Declaration on World Tourism, its main aim is to improve people’s quality of life and creation of better living conditions for all. While this is the case, experimental research reveals, that factors affecting demand and supply in tourism vary from place to place. A common influencer of demand and supply in tourism are external factors like market forces and economic conditions, which determine financial and physical flows.

Primary factors affecting demand and supply in tourism in the world

The first variable that affects demand and supply in tourism is per capita income of urban dwellers. Importantly, the demand of tourism in a particular country is another country’s supply. The demand for tourism therefore depends on income of tourists. When the revenue increases, this is likely to increase the demand for people to travel. Higher per capita income gives people the economic power to enjoy tourism facilities. If the demand for these amenities is high, it means people are able to meet their basic needs and still better their lives with tourism. This mainly affects urban dwellers as those in rural areas usually live in economic strains. In fact, other factors affecting demand and supply in tourism depend on income and prevailing economic conditions.

The media also plays a major role in determining demand and supply in tourism. Many tourists tour other countries or tourist attraction sites because of the image the media creates about the host. Today, television and the internet play a crucial role in marketing destinations than any other communication channel. With good promotion strategies, a positive image of a destination increases the demand and vice versa. Through branding, marketers create a positive image of the destination in the mind of potential travelers, thus increasing the chances of attracting tourists from different parts of the world.

How price affects tourism demand and supply

Like in normal business of trading goods and services, price equally affects demand and supply in tourism. As a result, some players in the industry use price as a strategy to attract tourists from various places globally. Generally, tourists prefer destinations that offer affordable rates for their tourism facilities. Thus, tourism companies must strike a balance between making profits and attracting travelers with relatively cheap rates to remain competitive in the market.

However, affordable price does not mean comprised quality. Tourists have numerous options to consider. With the ease to access information about different destinations, tourists are able to make informed decisions before paying to travel. For a destination to be more favorable than other alternatives, it must consider all the factors affecting demand and supply in tourism.

Customer related factors affecting demand and supply in tourism

Demand and supply in tourism depends on customer satisfaction. People prefer visiting destinations that offer total satisfaction. One of the ways of achieving this is through excellent customer services. For instance, players in the market should furnish potential travelers with relevant information about their products and services on time to allow them make a choice. With stiff competition, good customer service reassures tourists that you care. No one wants to spend their money where the service provider has no touch with their needs.

Availability of accommodation facilities also determines demand and supply in tourism. Tourists prefer destinations that offer complete packages with accommodation facilities. This makes traveling experience more memorable that seeking hotel services far from your preferred destination. These facilities must however be accessible for easy movement from one point to another.

A country’s infrastructure also affects demand and supply in tourism. People prefer visiting countries that have good road network, communication channels, airports, and health facilities. This is why developed countries like the U.S, Britain, and France visit more tourists than developing countries. Other factors affecting demand and supply in tourism include currency exchange rate, season, climate, security, and government regulations among others.

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http://cprenet.com/uploads/archive/IJBBS_12-1304.pdf

http://repository.up.ac.za/bitstream/handle/2263/24684/02chapters3-4.pdf?sequence=3

http://toolkit.smallbiz.nsw.gov.au/part/12/61/248