Modelling Tourism Demand in Macau: A Panel Analysis

Abstract

This study aims to examine the determinants affecting tourism demand in Macau. Macau is highly dependent on the tourism and gambling industry, and its economic activities are almost fully controlled by these industries. To ensure the sustainable growth of the tourism industry in Macau, it is crucial to identify the factors influencing its tourism demand. A panel regression covering quarterly data of ten major tourist-generating countries from 2010Q1 to 2019Q4 has been employed in this study. The selected determinants include income level of origin countries, transportation cost, and exchange rate. The empirical results from the fully modified ordinary least square (FMOLS) and dynamic ordinary least square (DOLS) models clearly showed that the income levels in origin countries and exchange rate significantly affect tourism demand in Macau. Income level is positively related to tourism demand while the exchange rate adversely affects tourism demand in Macau. Transportation cost, interestingly, is a statistically insignificant determinant for the Macau tourism demand. This is because majority of the tourists visiting Macau are from neighbouring countries such as China and Hong Kong, and thus the travel cost is not their main consideration when deciding to travel. The empirical findings of this study validated the linkage among income level, exchange rate, and transportation cost on tourism demand in Macau. This study is useful for the government and key industry players to design strategic tourism plans for sustainable growth of the tourism industry in Macau.

The Impact of Climate Change on Tourism Demand in China

“…Dogru et al (2019) mentioned that the inclusion of both climatic and non-climatic variables are necessary in the tourism demand model. The non-climatic variables employed in the existing tourism studies including tourists' income (Puah et al, 2022;Jong et al, 2020;Kumar and Kumar, 2020;Cheng, 2012), exchange rate (Puah et al, 2022;Ulucak et al, 2020;Meo et al, 2019;Puah et al, 2014;Cheng, 2012), tourism price (Jong et al, 2020;Kumar and Kumar, 2020;Tang and Tan., 2016), and transportation cost (Soh et al, 2022;Soh et al, 2020;Tanjung et al, 2017).…”

Study on the coupled coordination relationship and constraining factors of Macau’s gambling-tourism-economic development from the perspective of urban high-quality development

“…Macao's economic development has gone through four different stages since the handover, including fluctuating development from the handover to 2004, slow development from 2005 to 2009, transformational development from 2010 to 2020, and the post-epidemic era since 2020. After the outbreak of the COVID-19 epidemic in 2020, the number of global cross-border tourism dropped significantly, especially the number of tourists in Macau, with the gaming industry as a pillar industry, falling off a cliff (Puah et al, 2022). According to data released by the Macau Gaming Inspection Bureau, the number of tourists in June 2021 dropped by 50% compared with the same period.…”