Asymmetric Business Cycle Effects and Tourism Demand Cycles

Keywords

small islands, business cycle, tourism demand cycle, 2SLS approach, output gap framework

Abstract

This study examines the relationship between business and tourism demand cycles in Aruba and Barbados during 1970–2015. The study uses a 2SLS method and is grounded in the output gap approach. The results indicate that business cycles explain nearly 49% of tourism demand flows to Aruba and nearly 91% to Barbados. Thus, the study sheds light on the nature of the relationship between business and tourism demand cycles, which could help managers and policy makers refine their strategies to further tourism development. Procyclical and asymmetric movements characterized the long-term co-movements between the business cycles and tourism demand variables. However, individual variables were stationary, hence transitory in nature, and therefore mainly driven by demand motivations. The asymmetric fluctuations were defined by positive and negative gaps, with the former displaying stronger duration effects compared to the latter. The relationship between the two variables seems country specific in nature.

Publication Date

1-1-2018

Number of Pages

419-436

Document Type

Article

Language

English

Source Title

Journal of Travel Research

Volume

57

Issue

4

College

Rosen College of Hospitality Management

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