MODELING THE TOURISM MARKET BEHAVIOR BASED ON DISCRETE EQUILIBRIUM MODELS “SUPPLY – PRICE – DEMAND”

Ihor  Novakivskyi; Ihor  Kulyniak; Yurii  Dziurakh; Solomiya  Ohinok; Lilia  Ukrainets

doi:10.2478/eoik-2024-0036

Authors

Ihor Novakivskyi Lviv Polytechnic National University, Lviv, Ukraine
Ihor Kulyniak Lviv Polytechnic National University, Lviv, Ukraine
Yurii Dziurakh Lviv Polytechnic National University, Lviv, Ukraine
Solomiya Ohinok Lviv Polytechnic National University, Lviv, Ukraine
Lilia Ukrainets Ivan Franko National University of Lviv, Lviv, Ukraine

DOI:

https://doi.org/10.2478/eoik-2024-0036

Keywords:

tourism, demand function, supply function, price, market segments, lag, Cobweb model

Abstract

The work is devoted to the modeling of the behavior of the tourism market in the conditions of a supply random lag, distributed according to normal and uniform distribution laws. The behavior of dependences on the tourist market of supply and demand on the price is considered. The modeling of the behavior of the tourism market was carried out using a market dynamic model in the plane of variables “supply – price – demand” taking into account the interests of different groups of consumers, primarily from the point of view of pricing. The delay between changes in supply and demand volumes is taken into account using a Cobweb model. To test this method, information was collected on family expenses when traveling abroad (outbound tourism, tourist vacations lasting 7-15 days) by surveying the employees of 38 travel organizations as of 2021. Three segments of the tourism market are identified: low ($2000 - 4000), medium ($4000 - 12000), and VIP-segment ($12,000 - 20,000). The analysis of the modeling results showed that the behavior of tourists of different segments can significantly influence the market dynamics. The use of a Cobweb model allowed for determining the level of stability of tourist behavior and assessing the possibility of consumer migration from one segment to another. Sensitivity to price changes and response to new offers from different segments can be different, which is important for determining pricing strategies, marketing, and the development of new tourism products.

References

Alfarhan, U. F., Olya, H., & Nusair, K. (2023). How do prosperity and aspiration underlie leisure tourism expenditure patterns? Tourism Economics, 29(3), 842–849. https://doi.org/10.1177/13548166211064215

Androniceanu, A., Georgescu, I., & Mirică (Dumitrescu), C. O. (2022). Social protection in Europe, a comparative and correlative research. Administratie si Management Public, 38, 31–45. https://ramp.ase.ro/vol38/38-02.pdf

Argiro, M. A. E., Alexandra, L. M., Darío, P. G. H., & Miriam, R. A. (2022). Migration and tourism in flow territories in the context of globalization | Migración y turismo en territorios de flujo en el contexto de la globalización. Revista Venezolana de Gerencia, 27(100), 1559–1576. https://doi.org/10.52080/rvgluz.27.100.17

Aydin, B., & Emeksiz, M. (2018). Sustainable urban tourism success factors and the economic performance of small tourism enterprises. Asia Pacific Journal of Tourism Research, 23(10), 975–988. https://doi.org/10.1080/10941665.2018.1513049

Bashynska, I., Smokvina, G., Yaremko, Y., Lemko, Y., Ovcharenko, T., & Zhang, S. (2022). Assessment of investment and innovation image of the regions of Ukraine in terms of sustainable transformations. Acta Innovations, 43, 63–77. https://doi.org/10.32933/ActaInnovations.43.6

Bénassy, J.-P. (2011). Walras, non clearing markets and imperfect competition. In General Equilibrium Analysis: A Century after Walras. https://www.routledge.com/General-Equilibrium-Analysis-A-Century-after-Walras/Bridel/p/book/9780415746267

Blahun, I., Dmytryshyn, L., & Leshuk, H. (2017). Simulative model for evaluation of investment processes in the regions of Ukraine. Investment Management and Financial Innovations, 14(3), 322–329. https://doi.org/10.21511/imfi.14(3-2).2017.03

Bondarenko, S., Rusavska, V., Niziaieva, V., Manushkina, T., Kachanova, T., & Ivaniuk, U. (2021). Digital logistics in flow management in tourism. Journal of Information Technology Management, 13, 1–21. https://doi.org/10.22059/JITM.2021.80734

Bonilla-Quijada, M., Tugores-Ques, J., & Olmo Arriaga, J.L. (2021). Promotion of urban tourism: insights into user engagement on social media. Information Technology and Tourism, 23(4), 611– 632. https://doi.org/10.1007/s40558-021-00213-6

Boto-García, D., & Baños Pino, J. F. (2024). Preference Shifts During Health Shocks: Foreign Tourists’ Expenditure–Price Elasticity Throughout the Pandemic. Journal of Travel Research, 63(3), 642–658. https://doi.org/10.1177/00472875231170223

Brijs, T., Geth, F., Siddiqui, S., Hobbs, B. F., & Belmans, R. (2016). Price-based unit commitment electricity storage arbitrage with piecewise linear price-effects. Journal of Energy Storage, 7, 52–62. https://www.sciencedirect.com/science/article/abs/pii/S2352152X16300706

Brochado, A., Rodrigues, P., Sousa, A., Borges, A., Veloso, M., & Gómez-Suárez, M. (2023). Resilience and Sustainable Urban Tourism: Understanding Local Communities’ Perceptions after a Crisis. Sustainability (Switzerland), 15(18), 13298. https://doi.org/10.3390/su151813298

Busetto, F., Codognato, G., & Ghosal, S. (2008). Cournot-Walras equilibrium as a subgame perfect equilibrium. International Journal of Game Theory, 37(3), 371–386. https://doi.org/10.1007/s00182-008-0123-8

Camilleri, M. A. (2018). Tourism Supply and Demand. In Tourism, Hospitality and Event Management, pp. 139-154. https://doi.org/10.1007/978-3-319-49849-2_8

Carvache-Franco, M., Regalado-Pezúa, O., Sirkis, G., Carvache-Franco, O., & Carvache-Franco, W. (2023). Market segmentation in urban tourism: A study in Latin America. PLoS ONE, 18 (5 May), e0285138. https://doi.org/10.1371/journal.pone.0285138

Chalupa, S., & Petricek, M. (2024). Understanding customer’s online booking intentions using hotel big data analysis. Journal of Vacation Marketing, 30(1), 110–122. https://doi.org/10.1177/13567667221122107

Chen, C. (2023). Discrete Caputo Delta Fractional Economic Cobweb Models. Qualitative Theory of Dynamical Systems, 22(1). https://doi.org/10.1007/s12346-022-00708-5

Chen, X., Choi, J. H., Larsen, K., & Seppi, D. J. (2022). Learning about latent dynamic trading demand. Mathematics and Financial Economics, 16(4), 615–658. https://doi.org/10.1007/s11579-022-00317-5

Cherniaieva, O., Kulinich, T., Gutsul, T., Korolkov, V., & Gubar, O. (2023). Innovative transformation of Ukraine’s economy in the context of globalization: theoretical and analytical aspects. Financial and Credit Activity: Problems of Theory and Practice, 1(48), 249–257. https://doi.org/10.55643/fcaptp.1.48.2023.3977

Chi, J. (2022). Asymmetric own- and cross-price effects: the case of US outbound tourism demand. Current Issues in Tourism, 25(15), 2479–2499. https://doi.org/10.1080/13683500.2021.1970119

Civelek, M., Kljucnikov, A., Krajcík, V., & Zufan, J. (2019). The importance of discount rate and trustfulness of a local currency for the development of local tourism. Journal of Tourism and Services, 10(19), 77–92. https://doi.org/10.29036/jots.v10i19.117

Correia, A., Kozak, M., & Gonçalves, F. F. (2018). Why Do Tourists Spend Extravagantly in Portugal? A Binary Logistic Regression by Quartiles. Tourism Planning and Development, 15(4), 458–472.

https://doi.org/10.1080/21568316.2017.1360934

Craggs, R., & Schofield, P. (2009). Expenditure-based segmentation and visitor profiling at The Quays in Salford, UK.Tourism Economics,15(1), 243–260.https://doi.org/10.5367/000000009787536753

Dolnicar, S. (2013). Tourism market segmentation: A step by step guide. In Handbook of Tourism Economics: Analysis, New Applications and Case Studies, pp. 87-104. https://doi.org/10.1142/9789814327084_0004

Dolnicar, S. (2022). Market Segmentation for e-Tourism. In Handbook of e-Tourism, pp. 849-863. https://doi.org/10.1007/978-3-030-48652-5_53

Duro, J. A., & Turrión-Prats, J. (2022). Seasonality and the contribution of markets: Comparing methods. Tourism Management Perspectives, 43. https://doi.org/10.1016/j.tmp.2022.100987

Fadily, S.E.L., & Kaddar, A. (2023). Cobweb model with two delays: Stability and bifurcation. Results in Nonlinear Analysis, 6(2), 147–158. https://www.nonlinear-analysis.com/index.php/pub/article/view/254

Fuinhas, J. A., Belucio, M., Castilho, D., Mateus, J., & Caetano, R. (2020). Tourism and economic growth nexus in Latin America and Caribbean countries: Evidence from an autoregressive distributed lag panel. Academica Turistica, 13(1), 21–34. https://doi.org/10.26493/2335-4194.13.21-34

Hajibaba, H., Grün, B., & Dolnicar, S. (2020). Improving the stability of market segmentation analysis. International Journal of Contemporary Hospitality Management, 32(4), 1393–1411. https://doi.org/10.1108/IJCHM-02-2019-0137

Heggedal, T.-R., Helland, L., & Moen, E. R. (2023). Sequential price setting: theory and evidence from a lab experiment. International Economic Review. https://doi.org/10.1111/iere.12680

Helmold, M. (2022). Economic Pricing, 3C-Pricing and Cost-Estimation Concepts. In Management for Professionals, F376, pp. 63-73. https://doi.org/10.1007/978-3-031-10097-0_6

How Market Segments and Brand Segments Work Together (2024) / PrintPlace.com. https://www.printplace.com/articles/brand-and-market-segments

Ilychok, B., Karkovska, V., Dziurakh, Y., & Маrmulyak, A. (2023). Changing trends in Ukraine’s demographic security as a key indicator of socioeconomic stability. Financial and Credit Activity: Problems of Theory and Practice, 2(49), 350–360. https://doi.org/10.55643/fcaptp.2.49.2023.4020

Imamboccus, R., Seetanah, B., Khan Jaffur, Z., & Nunkoo, R. (2024). The exchange rate; its volatility and tourism demand. Anatolia: An International Journal of Tourism & Hospitality Research. https://doi.org/10.1080/13032917.2024.2303639

Iyer, K. C., & Thomas, N. (2020). Achieving regional connectivity of airports using system dynamics modelling. Construction Research Congress 2020: Infrastructure Systems and Sustainability – Selected Papers from the Construction Research Congress 2020, 453–462. https://doi.org/10.1061/9780784482858.050

Jarvis, M., & Tint, P. (2009). Innovations at workplace: An evidence-based model for safety management. Business: Theory and Practice, 10(2), 150–158. https://doi.org/10.3846/1648-0627.2009.10.150-158

Kah, J. A., Lee, S.-H., & Kim, J. S. (2022). The Effects of Travelers’ Price Sensitivity on Information Search Behaviors. Sustainability (Switzerland), 14(7). https://doi.org/10.3390/su14073818

Kalaitan, T., Hrymak, O., Kushnir, L., Kondrat, I., & Yaroshevych, N. (2023). Shadow economy in the hospitality industry. Ways of its educe in Ukraine. Financial and Credit Activity: Problems of Theory and Practice, 2(49), 300–312. https://doi.org/10.55643/fcaptp.2.49.2023.4002

Kobis, P., & Karyy, O. (2021). Impact of the human factor on the security of information resources of enterprises during the COVID-19 pandemic | Wpływ czynnika ludzkiego na bezpieczeństwo zasobów informacyjnych przedsiębiorstw podczas pandemii COVID-19. Polish Journal of Management Studies, 24(2), 210–227. https://doi.org/10.17512/pjms.2021.24.2.13

Kumar, J., Garg, A., & Fukey, L. N. (2018). In-Depth Review of Microeconomic Analysis of Business Tourist Spending. Asia-Pacific Journal of Innovation in Hospitality and Tourism, 7(2), 39–50. https://fslmjournals.taylors.edu.my/wp-content/uploads/APJIHT/APJIHT-2018-7-2/APJIHT-2018-P3-7-2.pdf

Li, T., Qian, Z., Deng, W., Zhang, D., Lu, H., & Wang, S. (2021). Forecasting crude oil prices based on variational mode decomposition and random sparse Bayesian learning. Applied Soft Computing, 113. https://doi.org/10.1016/j.asoc.2021.108032

Lozano, J., Rey-Maquieira, J., & Sastre, F. (2021). An Integrated Analysis of Tourism Seasonality in Prices and Quantities, with an Application to the Spanish Hotel Industry. Journal of Travel Research, 60(7), 1581–1597. https://doi.org/10.1177/0047287520947807

Lynn, M. (2007). Brand segmentation in the hotel and cruise industries: Fact or fiction? Cornell Hospitality Report, 7(4), 6–15. https://core.ac.uk/download/pdf/145016198.pdf

Malaval, P., Bénaroya, C., & Aflalo, J. (2014). Pricing Policy. In Management for Professionals, Vol. Part F295, pp. 275-307. https://doi.org/10.1007/978-3-319-01354-1_8 Market channels and segments in home decoration and home textiles (2021) / CBI.eu. https://www.cbi.eu/market-information/home-decoration-home-textiles/market-channels-andsegments-home-decoration-and

Masiero, L., & Nicolau, J. L. (2012). Tourism Market Segmentation Based on Price Sensitivity: Finding Similar Price Preferences on Tourism Activities. Journal of Travel Research, 51(4), 426–435. https://doi.org/10.1177/0047287511426339

Misaki, K. (2023). Léon Walras’s Economic Thought: The General Equilibrium Theory in Historical Perspective. https://doi.org/10.4324/9781003367338

Moore, J. H. & Weatherford, L. R. (2001). Decision Modelling with Microsoft Excel. Upper Saddle River, NJ: Prentice Hall. https://books.google.com.ua/books/about/Decision_Modeling_with_ Microsoft_Excel.html?id=pb8oAAAACAAJ&redir_esc=y

Nguyen, M. C., Tran, X., & Le, B. N. (2023). Slutsky equation in tourism: an empirical study in Vietnam. Anatolia, 34(4), 541–551. https://doi.org/10.1080/13032917.2022.2093930

Nguyen, Q. H. (2021). Impact of investment in tourism infrastructure development on attracting international visitors: A nonlinear panel ARDL approach using Vietnam’s data. Economies, 9(3). https://doi.org/10.3390/economies9030131

Novakivskyi, I., Kulyniak, I., Bondarenko, Y., Dziurakh, Y., & Rachynska, H. (2022). Modeling the Minimization of Accommodation Costs while Developing a Tourist Route. In Proceedings of the International Scientific and Technical Conference on Computer Sciences and Information Technologies, CSIT, 2022-Novem, 309–312. https://doi.org/10.1109/CSIT56902.2022.10000837

Parvin, R. (2022). The Asymmetric Impacts of Crude Oil Prices, Inflation, the Exchange Rate, Institutional Quality, and Trade Balance on Tourist Arrivals in Bangladesh: A Nonlinear ARDL Model Approach. Pertanika Journal of Science and Technology, 30(1), 781–800. https://doi.org/10.47836/PJST.30.1.43

Pavlov, K., Pavlova, O., Ilyin, L., Novosad, O., & Bortnik, S. (2023). Assessment of Innovation and Investment Attractiveness of the Western Ukrainian Regional Market of Tourist Services. ECONOMICS – Innovative and Economics Research Journal, 11(1), 45–68. https://doi.org/10.2478/eoik-2023-0005

Petrick, J.F. (2005). Segmenting cruise passengers with price sensitivity. Tourism Management, 26(5), 753–762. https://doi.org/10.1016/j.tourman.2004.03.015

Potier, J.-P. (2023). Léon Walras: A trilogy of pure, applied and social economics. In A History of Economic Thought in France: The Long Nineteenth Century. https://doi.org/10.4324/9780429202407-7

Pratt, S. (2012). Tourism Yield of Different Market Segments: A Case Study of Hawaii. Tourism Economics, 18(2), 373-391. https://doi.org/10.5367/te.2012.0112

Prokopenko, O., Rusavska, V., Maliar, N., Tvelina, A., Opanasiuk, N., & Aldankova, H. (2020). Digital-Toolkit for Sports Tourism Promoting. International Journal of Advanced Research in Engineering and Technology 11(5), 84–96. https://iaeme.com/Home/article_id/IJARET_11_05_010

Pyles, D. (2019). Demand theory and elasticity matrix construction. In Agricultural Policy Analysis Tools for Economic Development. https://doi.org/10.4324/9780429042959-11

Qin, X., Rui, Z., & Peng, W. (2023). Fractional derivative of demand and supply functions in the cobweb economics model and Markov process. Frontiers in Physics, 11, 1266860. https://doi.org/10.3389/fphy.2023.1266860

Rondan-Cataluña, F. J., & Rosa-Diaz, I. M. (2014). Segmenting hotel clients by pricing variables and value for money. Current Issues in Tourism, 17(1), 60–71. https://doi.org/10.1080/13683500.2012.718322

Saienko, V., Mezentseva, I., Tolchieva, H., & Salkova, I. (2020). Efficiency of tourism operators’ and tourism agents’ activities in the market of tourist services of Ukraine. Journal of Environmental Management and Tourism, 8(48), 1960–1966. https://journals.aserspublishing.eu/jemt/article/view/5797

Saleh, M. H., Jawabreh, O., al Fahmawee, E. A. D., & Ali, B. J. A. (2023). The Competitiveness of Jordanian Tourism Activity in Enhancement Economic Growth. Applied Mathematics and Information Sciences, 17(1), 161–174. https://doi.org/10.18576/amis/170117

Seetanah, B., & Sannassee, R. V. (2015). Marketing Promotion Financing and Tourism Development: The Case of Mauritius. Journal of Hospitality Marketing and Management, 24(2), 202–215.

https://doi.org/10.1080/19368623.2014.914359

Sharma, C. (2021). Testing the asymmetric effects of the economic policy uncertainty on the tourism demand in India. Tourism Economics, 27(4), 867–873. https://doi.org/10.1177/1354816619894080

Sharma, C., & Pal, D. (2020). Exchange Rate Volatility and Tourism Demand in India: Unraveling the Asymmetric Relationship. Journal of Travel Research, 59(7), 1282–1297. https://doi.org/10.1177/0047287519878516

Shi, W., & Li, K. X. (2017). Impact of unexpected events on inbound tourism demand modeling: evidence of Middle East Respiratory Syndrome outbreak in South Korea. Asia Pacific Journal of Tourism Research, 22(3), 344–356. https://doi.org/10.1080/10941665.2016.1250795

Shpak, N., Kulyniak, I., Novakivskyi, I., & Oleksiv, I. (2023). Clusterization in Tourism Development Level’s Assessment of Regions: Example of Ukraine. Journal of Tourism and Services, 14(26), 45–56. https://doi.org/10.29036/jots.v14i26.444

Shpak, N., Muzychenko-Kozlovska, O., Gvozd, M., Sroka, W., & Havryliuk, M. (2022). Comprehensive assessment of the influence of factors on the attractiveness of a country’s tourism brand – A model approach. Journal of Tourism and Services, 13(24), 209–235. https://doi.org/10.29036/jots.v13i24.354

Shpak, N., Muzychenko-Kozlovska, O., Gvozd, M., & Sroka, W. (2021). Simulation of the influence of external factors on the level of use of the regional tourism potential: A practical aspect. Administrative Sciences, 11(3), No 85. https://doi.org/10.3390/ADMSCI11030085

Smeral, E., & Song, H. (2015). Varying elasticities and forecasting performance. International Journal of Tourism Research, 17(2), 140–150. https://doi.org/10.1002/jtr.1972

Valdez, R., Tamagni, L., & Zanfardini, M. (2008). Hierarchical Travel-Market Segmentation Based on Travel Expenses. The case of San Martin de los Andes, Patagonia, Argentina. Revista Turismo Desenvolvimento, 10, 123-135. https://doi.org/10.34624/rtd.v0i10.13581

Vatsa, P., & Balli, F. (2023). How important are prices in long-haul travel? Evidence from New Zealand. Tourism Economics. https://doi.org/10.1177/13548166231215382

Veres, O., Ilchuk, P., Kots, O., Levus, Y., & Vlasenko, O. (2022). Recommendation System for Leisure Time-Management in Quarantine Conditions. In CEUR Proceedings of the 4th International Workshop of Modern Machine Learning Technologies and Data Science, MoMLeT and DS, 3312, 263–282. https://ceur-ws.org/Vol-3312/paper22.pdf

Vinnciombe, T., & Sou, P. U. J. (2014). Market segmentation by expenditure: An underutilized methodology in tourism research. Tourism Review, 69(2), 122–136. https://doi.org/10.1108/TR-05-2013-0020

Weng, J., Xiao, J., & Yu, L. (2022). Local Demand, Quality of Place, and Urban Tourism Competitiveness. Frontiers in Psychology, 12, 817805. https://doi.org/10.3389/fpsyg.2021.817805

Wołowiec, T., Pavlov, K., Pavlova, O., & Zaichuk, K. (2022). Tourist Services of the Western Region of Ukraine: Rating and Analysis. ECONOMICS – Innovative and Economics Research Journal, 10(1), 183–198. https://doi.org/10.2478/eoik-2022-0007

Ye, S., Lei, S. I., Zhao, X., Zhu, L., & Law, R. (2023). Modeling tourists’ preference between hotels and peer-to-peer (P2P) sharing accommodation: a pre- and post-COVID-19 comparison. International Journal of Contemporary Hospitality Management, 35(4), 1423–1447. https://doi.org/10.1108/IJCHM-12-2021-1556

Zhang, M., & Bell, P. C. (2007). The effect of market segmentation with demand leakage between market segments on a firm’s price and inventory decisions. European Journal of Operational Research, 182(2), 738–754. https://doi.org/10.1016/j.ejor.2006.09.034