A-travel-demand-model-for-Mainland-Chinese-tourist

PergamonPII:S0261-5177(97}00084-8ResearchNoteTmo'ismManagement,Vol.18.No.8,pp.593-597,1997©1997ElsevierScienceLidAllrightsreserved.PrintedinGreatBritain0261-5177/97$17.00+[I.Ill}AtraveldemandmodelforMainlandChinesetouriststoHongKongHailinQuDepartmentofHospitaliO'Management,Colh,ge(~fBusiness,SanFranciscoStateUniversity,1600HollowEO'Avenue,SanFrancisco,CA94132,USASophiaLamDepartmentqfHotelandTourismManagement,TheHongKongPolytechnicUniw'rsity,HornHung,Kowloon,HongKongThepurposeofthestudywastodeterminewhatexogenousvariablesbestexplainedthetraveldemandforMainlandChinesetouriststoHongKong.The12years(1984-1995)annualtimeseriesdataof'numberofMainlandChinesetouristarrivals','Chinadisposableincomepercapita','consumerpriceindicesinHongKongandChina'and'exchangerates'wasusedtodevelopatraveldemandmodel.Sevenexogenousvariableswereselectedforthemodelthroughaliteraturereview.AnOLSmultipleregressionanalysiswasperformedtoidentifythe'best'subsetofsevenexogenousvariablestodeterminethedemandmodel.TheresultsshowedthattraveldemandforMainlandChinesetouriststoHongKongcouldbeexplainedby'disposableincomepercapita'and'relaxationofvisarequirements'.©1997ElsevierScienceLtd.AllrightsreservedKeywords:China,HongKong,multipleregression,traveldemandIn1994,thePacificandAsiaTravelAssociationreportedthatoverthepastfewyears,theoutboundtravelmarketinthePeople'sRepublicofChina(P.R.China)hadsoared.~MostoutboundtravelwasconcentratedinAsiaandthepacificregion.By1995,thegrowthofChinaoutboundmarkettoAsiawasupmorethanthreefold,takingChinarapidlyintothetoptenoriginmarketsforsomedestinations.HongKongwasthenumberonedestinationforMainlandChinesetouriststravelingabroad.ThenumberofMainlandChinesetouristarrivalsinHongKongincreasedover9.4times,from214,854in1984to2,243,245in1995,withanannualaveragegrowthrateof23.8%2(seeTabh1).Therewasaslowdownin1989and199(/duetotheTiananmenSquareincident.However,MainlandChinesetouristarrivalssurgedagain2yearslaterinresponsetoforeignexchangerelaxationanda7-dayvisa-freepolicyontransients.Thegrowthratereached51c7~in1993.Afterashortstagnationbetweenlater1993andmid-1994asaresultofcrackdownoncorruptioninChina,themarketexperiencedasteady-to-goodgrowthagain.ChinabecamethenumberoneoriginmarketfortheHongKongtourismindustry,andaccountedfor22%ofthetotaltouristarrivalsinHongKongin1995.TheincreasingnumberofChinesetouriststravellingabroadandthefuturegrowthofthismarketdependsontwoessentials:theabilitytotravelintermsofincomelevels,andthepermissiontodoso?Since1978,followingthereformofthenationaleconomicsystemandtheimplemcntationoftheopendoorpolicy,theP.R.Chinaexperiencedarapideconomicgrowth.Thegrossdomesticproduct(GDP)increasedmorethanseventimes,fromRenMinBi(RMB)Y717billionin1984toRMB¥5773billionin1995.Duringthesameperiod,thedisposableincomepercapitaincreased7.2times,fromRMBY608in1984toRMB¥5004in19957TheaveragelivingstandardofMainlandChinesewassteadilyimproving,especiallyfortheresidentsofcoastalcitiesandspecialeconomiczones.~Peoplelivinginthesecoastalcitiescomprisethe593Atraveldemandmo&'llormainlandChinesetouriststoHongKong:HQuandSLainTable1NumberofMainlandChinesetouriststoHongKong(bycountryofresidence),1984-1995NumberYearoftourists%Change1984214854-198530897843.8198636347917.6198748459233.31988683(~(1441.I19897304086.919907543763.319918751)6216.01992114900231.31993173297850.81994194367812.219952243245I5.4bulkofthepotentialmarketforoutboundtravel.TheChinaYouthTravelAgencyreportedthatthemajorityofpeoplewhowereabletopayfortheirownforeigntravelwerefromcoastalcitiesandtheareasofGuangdong,Fujian,Shandong,ShanghaiandJiangsu,wheretheaveragepercapitaincomewasabouttwicethecountry'saverage.Despitelocalprosperity,theGDPpercapitaacrossthecountryremainedlowbyinternationalstand-ards,thatis,US$500perannum,andthislimitedtheopportunitiesforinternationaltravelforthemajority?Nevertheless,agrowingproportionofthepopulationdoeshavethefinancialpowertotravelabroad,andsomecommunitiesandregionswithinChinaaresignificantlybetteroffthanaverage.FromthetimeoftheP.RChina'sformationin1949until1983,China'soutboundtravelwaslimited.Whiletherewassomebusinessandofficialtravel,privatetravelwasnotofficiallyalloweduntil1983.ThestronggrowthofChinaoutboundmarkettoHongKongstartedintheearly1980sfollowingtheChinaOpenDoorPolicyandtheintroductionofvisitfriendandrelatives(VFR)travelsthroughtwo-waypermitsandintroductionof7-nightor8-daypackagetourslater.In1991,MainlandChineseweregivenpermissiontojointourstoMalaysia,SingaporeandThailand?ThepotentialoftheoutboundtravelmarketinChinaexcitedmanydestinationsandresearchers.Themathematicswassimpleinthatofthe1.186billionpopulationsinChina,onlyca0.31%ofitspopulationtraveledabroadin1993.About1(1%ofJapan'spopulationcreatedAsia'sbiggestoutboundmarketofca12milliontourists.Chinacouldproducethesamenumberoftouristswithjust1%ofitspopulation.ManyanalystshavethereforepredictedthatChinawillbecomeAsia'slargestoutboundmarket,overtakingJapan,bytheyear2000.'Avarietyofmethodologieshasbeenemployedtostudythedetermi-nantsofdemandforinternationaltourism.CrouchfoundthatOLSmul