Tourist spending dynamics in the Algarve: A cross-sectional analysis

  • Serra J
  • Correia A
  • Rodrigues P
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Abstract

This paper assesses the determinants of international tourists' spend-ing in the Algarve from 2007 to 2010. Based on a sample of 15,542 observations a cross-section model was estimated using ordinary least squares. The results reveal that a combination of socio-demographic, behavioural and motivation variables explain the spending patterns of international tourists in the Algarve. Analysis of the data indicates that tourist motivations related to accommodation facilities, cultural and historical resources, gastronomy, hospitality, prices and sightsee-ing tours positively affect tourists' spending. Moreover, the findings provide evidence that, over the years, the most loyal markets in Algarve reveal changing patterns in their spending behaviour. Des-tination management authorities should be aware of this spending behaviour of second-generation sun and sand visitors and should formulate strategies accordingly. Policy and managerial recommen-dations are discussed. This paper analyses the determinants of international tourist spending in the Algarve, based on socio-demographic and behavioural variables of international tourism demand. The Algarve is located in southern Portugal and is one of the most renowned sun and sand destinations worldwide. Various studies have analysed the determinants of tourist expenditure (The last two studies focus specifically on sun and sand destinations. These authors claim that due to the shifts in tourism motivations and travel patterns it is advisable to assess tourism demand by expenditure in order to depict tourism profitability. Alegre et al (2011) and Wang et al (2006) argue that tourists' expenditure may not be explained solely by the socio-economic status of tourists. This paper fills a gap in the literature by analysing determinants of tourist expenditure to measure the value added by different types of tourism motivations for a given destination (the Algarve). Only a few studies address how motivations may affect tourist expendi-ture (Kastenholtz et al, 1999; Laesser and Crouch, 2006; Swanson and Horridge, 2006; Alegre and Cladera, 2009; Boo and Jones, 2009; Alegre et al, 2011). This research aims to (a) estimate the determinants of international tourists' expenditure in the Algarve, (b) identify how motivations may lead to quite different expenditure patterns and (c) assess whether the determinants of tourist spending vary across years. Estimations are performed cross-sectionally to look for the characteristics that define different tourist consumption patterns accord-ing to socio-demographic and behavioural characteristics, taking the dynamic patterns of today's markets into consideration. Data were collected through a self-administered questionnaire survey applied to international tourists on their departure from Faro airport (Correia and Pimpão, 2012). Hence, this paper looks to explain international tourist spending in the Algarve based on motivations, past behaviour, travel companions, overall satisfaction, return intention and socio-demographic variables. The paper is organized as follows. The next section discusses and summarizes the theoretical argument for the choice of the determinants of tourist expendi-ture and the theory of discrete choice grounded in Lancaster's (1966) original work on consumer analysis characteristics and followed by other authors (Rugg, 1973; Morley, 1992; Papatheodorou, 2001). Several hypotheses are established and justified based on literature that explored and analysed the determinants of tourist expenditure. The third section presents the methodology and the data set considered in the present research. Estimated results are provided in the fourth section. The fifth section summarizes and presents the conclusions, limitations and perspectives for future research.

Author-supplied keywords

  • Algarve
  • Microeconomic analysis
  • Multiple regression analysis
  • Tourism demand
  • Tourist spending
  • Travel motivations

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