EMPIRICAL ANALYSIS OF THE DYNAMICS OF TOURISTS USING A SIMPLE STOCHASTIC MODEL: CASE OF OKINAWA

Abstract

Departing from the conventional theoretical approach, which explains tourism demand by various kinds of determinants, this paper proposes a model in which the dynamics of the number of tourists is explained by probabilistic behaviors. More specifically, the model assumes two different probabilities—one for first-time travelers and the other for frequent travelers. Based on this theoretical framework, the paper empirically examines the dynamics of the number of tourists to Okinawa, Japan. We find that income and transport costs explain the probability of first-time visitors, but that they do not explain for that of repeat visitors. Instead, the congestion index, which reflects the busy lifestyle in large cities, does so. This suggests that tourism policy should differ depending on how well-established the location is as a tourist destination. Given that Okinawa is acknowledged as the foremost resort destination among the Japanese, the priority for the resources allocation of tourism promotion should be on the preservation of the natural environment and the original culture, thereby offering unusual experiences to the visitors.