ECONOMETRIC FINDINGS Asst' Prof' Dr' Vedat Yorucu

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ECONOMETRIC FINDINGSAsst. Prof. Dr. Vedat
Yorucu

• Department of Economics, EMU
• vedat.yorucu_at_emu.edu.tr
• vyorucu_at_hotmail.com

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Presentation outline

• Explaining the model
• Aim of the modelling
• Econometric findings
• Interpretations of econometric results
• Recommendations

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ModellingThe Econometric Model
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The aim of ECONOMETRIC modelling

• TOURISM EXPANSION IS A COMPLEX AND HIGHLY
  VOLATILE BUSINESS, REQURING KNOWLEDGE OF
  POTENTIAL SOURCES OF FOREIGN DEMAND.
• CYPRUS (NORTH OR SOUTH) IS ONE OF MANY CHOICES
  FOR POTENTIAL TOURISTS.
• OUR MODEL IS DESIGNED TO DETERMINE WHICH
  PARTICULAR DETERMINANTS (called independent
  variables) are the most critical factors in the
  minds of POTENTIAL ARRIVALS TO BOTH MARKETS IN
  THE ISLAND.
• Our EMPIRICAL FINDINGS provide GUIDELINES to the
  policy makers and tourism industry stakeholders
  so they can better undertake FOCUSSED MARKETING
  AND PROMOTION.

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• Table-XXIV Estimated short-run tourism demand
  dynamic models.
• 1.Turkey to N. Cyprus (1980-2006)
• ?A1 0.033 1.139 ?INC1t-1 0.001
  ?COL1t-4 0.293?A1t-1 0.300 DM91 0.713 Ut-1
• (0.71) (2.08)
  (0.04) (2.16) (-2.20)
  (-2.43)
• 2. UK to N. Cyprus (1986-2006)
• ?A2 0.167 8.645 ?INC2t-1 0.127
  ?COL2t-1 0.064?A2t-1 0.455 DM91 0.623 Ut-1
• (5.66) (3.03)
  (-3.92) (-0.49)
  (-3.11) (-2.49)
• 3. Germany to N. Cyprus (1987-2006)
• ?A3 0.042 0.607 ?INC3t-1 0.102
  ?COL3t-1 0.344 ?A3t-1 0.507 DM91 0.684
  Ut-1
• (0.237) (0.138)
  (-2.427) (2.305)
  (-2.114) (-2.110)
• 4. Greece to S. Cyprus (1982-2006)
• ?A4 0.054 0.460 ?INC4t-1 0.489
  ?COL4t-1 0.082 ?A4t-1 0.688 Ut-1
• (2.486) (0.369)
  (1.848) (0.859)
  (-3.280)
• 5. UK to S. Cyprus (1984-2006)

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Interpretations of econometric results

• In the North case, the statistically significant
  independent variables
• national income per head for Turkish and British
  tourists and
• cost of living for British and German tourists.
• In the case of the South,
• national income per head is significant for
  British tourist only
• cost of living is significant only for Germans.
• Repeat tourism is significant for both the North
  and the South. In the case of the South the
  British are highly significant for repeat tourism
  while in the North, Turkish and German repeat
  tourist are significant but to a lesser extent.

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IMPLICATIONS FROM THE MODELNorth

• Tourism markets for the North reveal a major
  unique feature Turkey is the largest source by
  number of arrivals, but Britain is number one in
  terms of tourism revenue as the British spend 7
  to 10 nights compared to just 2 or 3 nights in
  cases of Turkish tourists. Germany is the third
  major source.
• For Turkish tourists INCOME/CAPITA in Turkey is
  statistically significant, but this independent
  variable is even more significant for British
  tourists.
• COST OF LIVING in the North is the main
  determinant for both the British and German
  tourists.
• The POLICY IMPLICATIONS of these findings
• Marketing and publicity in the North should
  promote high income tourism product (such as
  special interest packages (quality holiday
  packages) to the Turkish and British tourist
  market rather than mass tourism (all inclusive
  sand sea sun) for North Cyprus. For German
  arrivals, and to a lesser extent in the case of
  British, price sensitive packages should be
  offered.
• Marketing and promotion policies should be
  COUNTRY SPECIFIC, not one fit for all potential
  markets.

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South

• British tourists are the largest single source
  for the South and BRITISH INCOME PER CAPITA is
  the most significant determinant of British
  arrivals in the South.
• The second major source of international tourists
  for the South is Germany and for Germans the most
  significant determinant is the COST OF LIVING IN
  THE SOUTH,
• Greece is the third major source, but it is not
  significant in our demand estimation.
• The policy implications of these findings are
  advertising and marketing for more tourists
  should be MARKET-SPECIFIC
• In the case of the British market, SPECIAL
  INTEREST TOURIST PACKAGES (high income/quality)
  tourist products need to be offered
• In the case of the German market, cheaper holiday
  packages seem more appropriate
• Promoting Cyprus as single tourist product will
  increase the overall performance in both NORTH
  AND SOUTH, especially in income/price sensitive
  Britain and Germany.