Non-constant reputation effect in tourism demand at Spanish Mediterranean destinations

Abstract

This study analyzes the international tourism demand at Spanish Mediterranean area. This destination receives the highest number of international arrivals in Spain. A dynamic econometric model is built following the Tourism Area Life Cycle (TALC) theory. Unlike other dynamic tourism demand models, our specification allows that the reputation and persistence effect (the effect of the lagged demand on current tourism demand) not to be constant. We estimate the model using panel data consisting of the 11 provinces which make up the Spanish Mediterranean area, and the 7 European countries which are the main origin markets, for the period 2001 to 2015. The results show a strong persistence in tourism demand. Furthermore, the reputation and persistence effect is positive and decreasing with the ratio between tourists and carrying capacity of the destination. Thus, this effect is not constant but varies across provinces and over time.