Measures and Importance of Tourism Demand Forecasting - Assignment Example

Tourism Reference: 10 Introduction: Patterns of tourism demand are shaped by a number of factors that include economic position of regions or countries, degrees of urbanization and the overall quality of life (World Tourism Organization report, 1995). These factors of tourism as outlined by a report of the World Tourism Organization in 1996 can be enlisted as, economic and financial development, demographic and social changes, technological innovations and improvements, infrastructural equipment and facility investments, political, legislative and regulatory factors, environment planning and climatic impact issues, trading developments and the safety of travel. These are the exogenous factors that affect tourism in any given country at a particular point in time. Beside these factors there are other key market forces that directly have an impact on the demand for, and supply and distribution of tourism products and services (Swarbrooke and Horner, 105). These factors include: First, consumer knowledge about tourism possibilities and tourist requirements; second, destination product development and product/services development by the private sector operators; third, trends in the structure of travel and the tourism operating sectors; fourth, marketing undertaken by the country looking to attract tourist traffic; and last, the supply of skilled and experienced human resources. Executive Summary: The following report shall seek to identify the factors that govern demand for tourism in Hong Kong and on the basis of these findings investigate the future on tourism in Hong Kong over the next decade. An accurate forecast of tourism demand is essential for the formulation of a sustainable tourism policy. It is to this end that paper will address the issues related to change in the tourism demand patterns outlining factors affecting this change including political, environmental factors, and other external factors. The promotion and marketing strategies that have been employed and how these had an impact on the actual number of tourism traffic. It will also look to investigate the pull factors the impact of the emerging markets on the tourism industry. Finally the report shall seek to address the issues of market segmentation, outline popular tourism products and the key trends and challenges. Measures and importance of tourism demand forecasting: The tourism industries and those interested in their success need to reduce the risks associated with a decision that would not yield the results that were initially expected out of it (Fretchling, 5). It is here that the importance of effective tourism demand patterns becomes very important. The tourism product is perishable, the people that are involved in the production of the tourism product are usually inseparable from the product, customer satisfaction is dependent on complimentary services, leisure tourism demand is extremely susceptible to the impacts of human and man made disasters and tourism supply requires large and long time investments. There is therefore a need for planning and forecasts that would predict demand and its patterns so that the preparation for supply can b made in advance. The measurement o tourism demand in Hong Kons is determined mostly by the Hong Kong tourism forecasting system (Song, 56). There are a number of methods that are used for tourism demand pattern forecasting (Page and Connell, 50). These include the qualitative methods like single moving average, single exponential smoothing, double exponential smoothing, classical decomposition and auto regression. There are also the casual methods that include regression analysis and structural ecometric methods. Finally, the qualitative efforts are, the jury of executive opinion, subjective probability method and Delphi method. There are also, of course the seasonal patterns that would need to be considered. The Numbers: Hong Kong is a small city of about 1100 sq. km. but has a large population of about 7 million. Hong Kong is one of the most popular tourist destinations in Asia. It receives over 10 million visitors annually, who altogether bring in slightly over US$10 billion in recent years (Nam N G and Y Li, 2000). The industry started being a real contributor to national GDP in the early part of the decade of the 1990s. Since then it fell into tough waters with the Asian economic crisis during 1997-98. It has recovered since then especially since the implementation of the service model in 2003 which has contributed to a large growth in the inbound tourist numbers from Mainland China. The total tourism expenditure associated to inbound tourism reached HK$ 117.3 billion in 2006. The tourism industry made has since created a record in 2007 when the numbers went up to 28 million visitor arrivals, up 11.6% year-on-year analysis (Official Hong Kong, Commerce and Economic development website). Hotel occupancy was at an average of 86% in 2007, down slightly from 86% a year earlier. A survey carried out by the Hong Kong tourism board in 2008 from among a total of 111 hotels and 20 tourist guesthouses revealed that there was about 90% occupancy. The story so far: Hong Kong has not been blessed with a large or a varied quantity or quality of land resources and yet it was named in 2004 one of the top 10 tourist destinations around the globe. This makes it almost imperative for one to understand and study in detail the tourism management aspects that the country has adopted, the factors that have aided this growth and the factors that have in the past put up obstacles or in future could do the same. Extensive study is therefore required of the applied marketing theories like those of market segmentation, market targeting, market positioning and the marketing mix model. Market segmentation on country by country basis: The Hong Kong Tourism Board (HKTB) has segmented the inbound tourism market into different geographic areas (Haiyan, 2006). The geographic market segmentation can be classified into mainland China, Taiwan, North Asia, Southeast Asia, North America, and Europe. According to the statistics that have been published by the HKTB, the followings are the top tourism generating countries/regions for Hong Kong in January – August 2006: Australia (2.13%), China (55.36%), Japan (5.05%), Korea (2.75%), Macao (2.26%), Philippines (1.78%), Singapore (2.11%), Taiwan (8.79%), UK (1.89%) and USA (4.49%), and the tourist arrivals from these 10 countries/regions accounted for about 86.66% of the total tourist arrivals in Hong Kong in the same period. Major attractions: Throughout its limited land, Hong Kong has been aggressively developing a variety of world-class tourist attractions. Some major developments include A Symphony of Lights, the Avenue of Stars, the Tsim Sha Tsui Promenade Beautification Project, the Hong Kong Disneyland Resort, the Ngong Ping 360, and the Hong Kong Wetland Park (Tourism Commission, 2005). There are also on view a number of festivals and celebrations that serve to attract tourist traffic and put on display the culture and the heritage that the country has to offer. Some of the region’s most popular annual festivals and events embody the essence of Chinese culture (Jung et. Al., Case Study of Destination Marketing). Hong Kong’s representatives have successfully developed its cultural festivals and events into worldwide, famous must-see or must-do attractions, which provide an excellent example of successful cultural tourism. The major festivals and events include Chinese New Year Celebrations, Hong Kong Winter Fest, Hong Kong Flower Show, Hong Kong Arts Festival, Hong Kong Shopping Festival, Cultural Kaleidoscope, and Best of the Best Culinary Awards (HKTB, 2005). The HKTB has been consistently leading a series of ambitious, impressive tourism campaigns and promotions since 2000. These ceaseless efforts have contributed greatly toward positioning Hong Kong as one of the top world tourist destinations. The major tourism campaigns include The City of Life, Cathay Pacific International Chinese New Year Parade and Fiesta, HSBC Hong Kong Mega Sale and Hong Kong WinterFest, and Hong Kong Salutes the World. There have also been efforts made to enhance the service quality of facilities and a generally hospitable atmosphere. These include the efforts of Travel Agents Ordinance, Quality Tourism Services (QTS), TOP (Tourism Orientation Program), Tourism Services Award, and A Hospitable Hong Kong campaign (HKTB, 2005). Political and environmental factors aiding tourism: 1. Political measures based on market segmentation: The main reasons for the successful tourism story that Hong Kong has so far to tell can be attributed principally to the efforts that have been put in by those in charge. Policy decisions have been taken keeping in mind the constraints of market segmentation. The fact that mainland China is the biggest demand provider has been kept in mind with the announcement of the Individual Visit Scheme in 2003. At present, the Individual Visit Scheme (IVS) covers 44 mainland cities. About 220 million mainland residents are now eligible for traveling to Hong Kong under this Scheme. Of the more than 9.26 million mainland visitors in January – August 2006, about 49.2% (over 4.55 million) traveled to Hong Kong under IVS. This represents a 23.7% year-on-year increase. From January 2007, IVS will be further extended to cover another 5 mainland cities with the total registered population of 36.5 million. On the other hand, the World Tourism Organization (UNWTO) has projected that mainland China will supply 100 million travelers by 2020, ranking number 4 in the world. It is quite reasonable to expect that, with the extension of IVS and the continuously growing outbound tourist markets of mainland China, Hong Kong will continue to welcome an increasing flow of mainland travelers in the years ahead. 2. Marketing Measures: The HKTB introduced on-line tourism marketing in 1995 by establishing a consumer website. This was re-launched at www.discoverhongkong.com in late 2000. The HKTB website applied the well-recognized key marketing principles of market segmentation, positioning, partnership, and relationship marketing. The website provided information for traditional segments, such as leisure travelers, business travelers, stopover travelers, and family group tourists, as well as other travel segments. It was also easy to recognize the logo of Hong Kong, the slogan of 2006 Discover Hong Kong Year, and positioning statements such as Hong Kong− Live it, Love it and Feel it, Enjoy it, and Taste it on most pages (HKTB, 2006). 3. In-Land attractions: Hong Kong has been developed by authorities in a manner that it has been perceived the world over as the hub of high rises and the heaven of urbanization. It has had a remarkable evolution as one of the best shopping hubs in the world. Beside this and despite its small size the country has immense potential for environment and ecological tourism. The territory indeed has more species of animals and plants than the whole United Kingdom & Northern Ireland Hong Kong is particularly rich in avian diversity; there are about 450 species of bird species recorded here so far, that equivalents to about one-third of that of the whole China mainland and about 5 percents of the world’s total. The Mai Po and Inner Deep Bay Ramsar Site, for example, is one of the most important coastal wetlands in east Asia where about three hundred species of bird are recorded and several hundred thousand water birds use its as wintering site or stop-over place during migration. Among them, about a quarter of the entire world population of the globally endangered Black-faced Spoonbill (currently estimated at about 700 birds) winters there. Challenges to growth: Hong Kong's tourism industry faced an increasingly large amount of political uncertainty due to the change of sovereignty in July 1997. The changes presented challenges to not just the investors and industry professionals there were a number. Most of the challenges are unrelated to the change in political administration, including competition from other destinations and Hong Kong's crowded real-estate market. Far from being a negative factor, the closer relationship with the mainland Chinese government should augment Hong Kong's position as both a destination in its own right and as a gateway for travelers entering and leaving the People's Republic. Since then the there have been many occasion when the industry has faced bleak time like the breakout of the SARS virus, the threat of natural calamities, proximity with China, the development and growth of Malaysia and Singapore among others. Future expected demand patterns: According to the research that has been conducted in recent years by scholars such as Prof. Song, what becomes evident is the fact that there is intense competition for inbound tourists between the tiger economies of South East Asia, especially between Hong Kong and Singapore. The country has been successful in developing its tourism to an extent that it was one of the best 10 in recent years, but it now faces stiff challenge from the partial opening up of China and from the fact that movement within the country has become easier. There is therefore the need to develop and offer tourism products/services that are “unique” and special to Hong Kong. This means that there needs to be certain sense of individuality that needs to be attached with te further development of the destination in demand patterns are to grow. Factors of product demad and supply would apply and the turist i.e. the customer for the tourism product offered needs to feel that he is getting value for money. Hong Kong would certainly lose its attraction as a shopping heaven for mainland tourists if the “forced shopping” practice is not curtailed or stopped. ‘word-of-mouth effect’ is one of the most powerful influencing factors that determines the demand for Hong Kong tourism. Bad publicity, such as the recent incident caused the ‘zero fair’ package tours for mainland Chinese visitors, will have a significant negative impact on the visitor numbers from the mainland. Competition also creates opportunities for collaboration. Since China has been gaining popularity as a tourist destination and it will become the world’s largest tourism destination in 2020, Hong Kong should develop joint tourism resorts and attractions, and market these products with the mainland together. Otherwise, Hong Kong will lose its comparative advantage as a world tourist city. Conclusion: in conclusion it may be stated that Hong Kong is definitely till date one of the few countries of the world that be a study in the effective management and attraction of tourists despite the constraints of space and resources. The steps that have been undertaken by the tourism department in order to successfully market all that Hong Kong has to offer are in fact nothing but compilations in a glossy package the cultural strengths that the country offers. The measurement of demand patterns and the way in which these are progressing however are proof enough of the fact that there is tif competition in store for the little tourism giant and it would be interesting to see how it copes with the competition that is coming its way. Reference: Swarbrooke, John and Horner, Susan, Consumer behavior in tourism, published by Butterworth-Heinemann, 1999 Nam Ng and Y. Li, Eco-tourism in Hong Kong: its potentials and limitations, Department of Geography, The University of Hong Kong, presented at the Cuarta Feria Ecoturistica y de Produccion, 2000 Jung, San Wong, et al., A Case Study of Destination Marketing in Hong Kong Heung V C, The Hong Kong Tourism Industry in Transition, pub, Cornell Hotel and Restaurant Administration Quarterly, Vol. 38 No. 1, 1997 Fretchling, Douglas, Forecasting tourism demand: methods and strategies, Published by Butterworth-Heinemann, 2001 Song, Haiyan, Tourism forecasting and marketing, Published by Haworth Press, 2003 Page, Stephen and Conell, Joanne, Tourism: a modern synthesis, Published by Cengage Learning EMEA., 2006 Haiyan, Song, Tourism demand in Hong Kong: the current status and future trends, PPRI research, 2006 Hong Kong tourism Board, website, accessed June 12, 2009, < http://www.discoverhongkong.com/login.html> Read More