Economic drivers for the Chinese tourists

Abstract

Asia, particularly China, has become an attractive market that receives much attention in the Norwegian tourism industry. This raises relevant questions about the sustainability of the Chinese tourism boom. If the Norwegian tourism industry increasingly targets this rapidly growing market with larger investments, it should respond to the prospects of long-term growth. Such prospects hinge on the economic drivers behind the influx of Chinese tourists. In this study, we use both descriptive data analysis and the ARDL model to investigate the main economic factors that drive Chinese tourists to Norway. Specifically, we investigate whether the boom of the Chinese tourists is a relatively stable trend associated with the growing Chinese economy or just a short-term phenomenon brought by the weakened NOK. Our findings suggest instead of the well-recognized Chinese economic growth, it is the improving price competitiveness of Norway resulting from the weakening Norwegian kroner that has made the boom of the Chinese tourists in Norway. This result suggests although the income effect is significant in affecting aggregate tourist flow from a source country, for a single destination, price competitiveness is the key to make a destination attractive since the substitution effects of other destinations are huge and the income effect becomes uncertain.