The factors which influence business travel and tourism demand




Business travel and tourism demand is influenced by a broad range of factors found in both the generating region and the destination. The factors outlined bellow tend to focus on the forces that will influence demand between a specific generating region and a particular destination. It also gives an indication of the factors that will influence demand overall in any particular generating region.

However, this is a highly generalized picture and specific factors will influence the demand for particular forms of business tourism such as incentive travel and training courses. Let us now look at how the market can be subdivided and segmented.

Factors influencing demand in the generating region and the destination

Generating region   Destination
Level of economic development and state of the economy A high level of economic development and a strong economy increases demand and vice versa Level of economic development and state of the economy
    Currency exchange rates High relative exchange rates for the generating region against destination makes travel cheaper and stimulates imports while reducing exports to the destination, and vice versa     Currency exchange rates
    Degree of political stability Political stability is required in both the generating region and the destination for business travel to flourish     Degree of political stability
    Cost of living A lower cost of living in the destination zone may well increase the attractiveness of the destination for conferences for people from the generating region       Cost of living
Historical and/or cultural links with particular places The stronger these links the higher the level of business tourism might be expected   Historical and/or cultural links with particular places
    The industrial structure Business travel is likely to be greater between generating regions and destinations which have shared interests in particular industries, products and services     The industrial structure  
  Government policies on trade relations The more both governments support the policy of free trade, the greater the likely level of business travel and tourism between the two   Government policies on trade relations

 

Segmentation

It is possible to segment the business travel market in many ways:

- Seasonality of business trip

- Short-haul vs long-haul travellers

- Those who book via agents and those who book directly

- Purpose of trip, e.g.Individual business trip, conference, incentive travel, etc.

- Nationality of business traveler

- Gender of business traveler

- Frequent vs less frequent travellers

- International vs domestic business travel

- Mod of transport used by the business traveler

- Age of the business traveller

The growing segments in the market appear to be:

• business travellers from newly industrialized countries such as South Korea or Taiwan

• business travellers from Eastern Europe where political change has led to growth of business tourism

• female business travellers

• people taking incentive travel packages

• frequent travellers

• long-haul business travellers.

The situation is constantly changing and the ways of segmenting the business travel market are likely to change, too, over time.

There are three other issues we would like to consider at this stage:

- the nature of demand for different types of business travel and tourism

- the levels of business travel and tourism and different industries

- the question of seasonality of demand.

The geography of demand

By definition, business travel and tourism involves the movement of people so its pattern of demand will clearly have a strong geographical dimension. This is manifested in two ways:

1 A distinction, as with leisure travel, between domestic, inbound and outbound travel.

The balance of these three types of demand will vary significantly between destinations.

2 Geographical differences, in terms of countries or regions of the world, from which a destination attracts the majority of its business travellers.

 

Differences in levels of inbound business tourism between countries

Еhe volume of demand for business travel and tourism in any destination is influenced by a wide variety of factors, in both the destination itself and the generating countries. It is not surprising, therefore, that the demand for business travel to different countries varies dramatically in terms of:

- the number of inbound business travellers

- the balance between business travel demand and other forms of tourism.



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