Habit formation or word of mouth: What does lagged dependent variable in tourism demand models imply?

Abstract

The effects of habit formation/persistence (HFP) and word of mouth (WOM) each play a critical role in influencing tourists’ decisions regarding whether to visit tourism destinations and therefore tourism policies and tourism management resource allocations. Nevertheless, in previous tourism demand studies, the two effects have been represented by the same time-lagged dependent variable, which makes the variable have an ambiguous meaning and biases the empirical results. The purpose of this study is to solve the ambiguity of a lagged dependent variable in tourism demand. We used economic theories regarding internal habits and external habits to clarify the meanings of HFP and WOM and revised the tourism demand model into a spatial dynamic panel model (SDPM). The empirical results suggested that an SDPM is a more accurate model for modeling tourism demand. The effects of variables in an SDPM are more consistent with theoretical expectations.

Uneven domestic tourism demand in times of pandemic

“…Several studies show that weather, in the origin as well as in the destination areas or at an earlier point in time have a significant impact on tourism flows (Bausch et al, 2021; Becken and Wilson, 2013; Eugenio-Martin and Campos-Soria, 2014; Kulendran and Dwyer, 2012; Li et al, 2017; Muñoz et al, 2021; Otero-Giráldez et al, 2012; Priego et al, 2015; Serquet and Rebetez, 2011; Taylor and Ortiz, 2009). Tourism demand is dynamic to its nature, influenced by habits, intentions and as well as words-of-mouth (Dogru et al, 2021; Garín-Muñoz, 2009; Liu, 2020; Song et al, 2008). This emphasises the importance of paying attention to earlier tourism behaviour.…”

A spatial origin‐destination approach for the analysis of local tourism demand in Italy

“…Empirical studies on tourism demand from a spatial perspective can be divided into two main groups. The first consists of studies that only take into account information on either the origin (demand‐side approach) or the destination (supply‐side approach) of tourists (see among others, Deng & Hu, 2019; Dong et al, 2019; Liu, 2020; Xu et al, 2020; Yang & Wong, 2012). The second group, using a gravity or O‐D approach, considers the characteristics of both origin and destination among the factors affecting tourism demand (see among others, Alvarez‐Diaz et al, 2020; Deng & Athanasopoulos, 2011; Marrocu & Paci, 2013; Patuelli et al, 2013).…”

“…When a spatial-temporal lag of the dependent variable is included rather than a spatially lagged dependent variable, as in Jiao et al (2020), Yang and Zhang (2019) and Liu (2020), and a time-lagged dependent variable to control for time-series dependence, their coefficients can be interpreted as measures of the relative strength of internal and external habit persistence (Korniotis, 2010).…”

Creating a Tourism Destination through Local Heritage: The Stakeholders’ Priorities in the Canavese Area (Northwest Italy)

“…Its identification and recognition also vary in relation to the period of time in which it is present on the tourism and leisure market [89]. In this sense, the governance of the region can lead this path through the identification of guidelines and implementation of tools and initiatives to stimulate the potential market, e.g., social media and word of mouth (WOM) [90][91][92][93], as well as by control systems to verify the results and monitor the social and environmental impact of tourism on the region [51,94,95].…”