Estimating the international tourism demand for Egypt : 'an econometric approach'

• Main Author: Nosier, Shereen Adel Hassan
• Other Authors: Nolan, Michael A.; Atkins, Jonathan
• Published: University of Hull 2012
• Subjects: 658; Business
• Online Access: http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.572204

The thesis aims to identify the main factors that significantly affect tourism demand for Egypt. Both time series data and panel data are used to model and forecast tourism demand for Egypt from all origins, as well as three individual regions of origin, including Europe, Arab and the Americas. The methodological and econometric approaches introduced in this thesis proceed from the simple to the more complex structure to obtain more reliable estimation. First, we estimate tourism demand for Egypt using the co-integration and error correction (CI/ECM) approach based on a single equation, followed by using a system of equations approach over the period 1970-2009. All the estimated econometric methods, in addition to two univariate time series methods, are used to generate ex-post forecasting for all the models over the period 2005-2009. The preferred method is used in producing ex-ante forecasting of future tourism demand for Egypt for the period 2010-2014. Panel co-integration techniques are also used to estimate tourism demand models over the period 1980-2009. Finally, the causality relationship between tourism demand and its economic determinants is estimated based on panel data analysis, which may provide more guidance for policy makers in Egypt. The results indicate that tourism demand for Egypt is found to be co-integrated with its fundamental determinants at the 1% significance level, with a high adjustment speed toward the steady state equilibrium. The importance of long-run income for all tourists from different nationalities is affirmed; with an elastic demand for non-Arab tourists. Price is also an important determinant, with a different effect in each originating region. It takes less than unity value for all tourists, except the Arab. Tunisia is found to be the most significant alternative to Egypt, with a complementary effect for Europe and the Americas tourists, but substitutability effect for Arab tourists. Hotel capacity is a significant and positive factor for all nationalities, except the Americas. Globalization is important in all models; it has a positive effect for all non-Arab nationalities. Political instability has a significant and negative effect, with the most effect on the Americas. All the determinants Granger cause tourist arrivals in the long run, but globalization and hotel capacity are of great importance with a bidirectional effect with tourist arrivals. Ex-post forecasting results show that the CI/ECMs outperform the other time series methods and produce highly accurate forecasts. The number of arrivals and nights from all origin markets is likely to increase in absolute terms (2010-2014), but with slower growth than recent trend.