MODELLING DOMESTIC TOURISM DEMAND FOR GHANA

Abstract

Domestic tourism plays a significant role in Ghana‟s economy as it generates markets for a wide variety of tourism products but lags behind other countries like United Kingdom, Germany, Kenya and other countries in terms of domestic tourism expenditure. Furthermore, no expenditure was known about the general value of domestic tourism at both macro and micro levels. Being motivated by this necessity, the study had to investigate Ghana‟s domestic tourism demand for tourism products from 2012 to 2017. The data used for the study covered 2012 to 2017. The study used Linear Almost Ideal Demand System (LAIDS) models (static and dynamic) to estimate the effects of changes in relative prices and real total tourism expenditure. It also used quantile regression model to determine the impact of socio-demographic factors on domestic tourism expenditure. For the LAIDS models, the results show that price and income are the main economic factors affecting domestic tourism demand in Ghana. For the long-run, the demand for tourism products in Ghana is price elastic and fairly unitary income elastic, whiles for the short run, it is price inelastic and income elastic. The quantile regression approach suggests that age of household head, educational level of household head, annual income of households and household loans are the main factors that affect domestic tourism expenditure in Ghana. The most significant outcome of the research has been an improvement to the LAIDS model by including a positivity restriction as one of the theoretical restrictions to cater for tourism products which violate the demand law. It is thus suggested that government and tourism practitioners should be careful of the pricing and taxation policies of tourism products in the country in order not to decrease domestic tourism participation.