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Inbound tourism refers to the activity of tourists traveling to locations outside their natural area for a period of no less than 24 hours and no longer than one year. The primary goal of traveling is to have fun rather than to find permanent jobs or to make money. People travel for a variety of purposes, but each has its own set of tourism needs. Accommodation, on the other hand, is a common requirement for all visitors. Many people travel away from home for pleasure, while others travel for exercise and vacation (Adams, 2008). Other people ride for business and social reasons. International tourism trade service is a very significant to many countries as it contributes to foreign exchange earnings as well as the creation of employment. International tourism has continued to grow as it is considered as the largest industry in the world.
Price and Income Elasticity in Inbound International Tourism Market
Elasticity can be defined as the relationship existing between two variables obtained when one measures the ratio of the percentage change in the determining variable to that of the percentage change in the variable being determined. Demand in tourism is influenced by several factors and the relationship with its determinants is measured as elasticity. Tourism is considered a normal product which entails a positive relationship between income and demand (EXY>0), where (EXY>0) is the elasticity of demand. Income elasticity is a measure of the percentage change in demand resulting from the percentage change in the incomes of consumers (Smith, 2014). If X is the income and Y is tourism demand the XXY is the income elasticity of demand.. There is a positive relationship between income and demand in the tourism industry in which case elasticity EXY>1. This implies that an increase in demand on a product is more than the increase in real income this case the product is considered a luxury. In some cases, consumers may purchase less of a particular tourism product in which case EXY
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