Determinants of Tourism Demand in the SADC Region

Abstract

This study estimates the determinants of tourism demand in Southern Africa Development Community (SADC) region using Generalised Least Squares (GLS) estimation procedure and panel data for the period 1997-2015. The results obtained suggest that the elasticities of tourism demand with respect to real capital investment on the tourism sector, real exchange rate, real gross domestic product (GDP), proportion of population with access to internet and global peace index are positive, while that with respect to inflation rate is negative. These results imply that for any country in the SADC region to attract more arrivals of tourists: it should invest significantly on the tourism sector, in terms of upgrading tourism infrastructure; implement exchange rate policy that is favourable to international tourists; and promote a reputation of being a peaceful and less corrupt country. Since tourism has strong linkages with other economic sectors, it is an ideal prospect for economic diversification.