E Review Of Tourism Research ERTR Vol 1 No 4 2003

E Review Of Tourism Research Ertr Vol 1 No 4 2003 Httpertr

The article explores how transportation pricing influences tourist decisions, focusing on demand elasticity in response to ferry fare changes to Vancouver Island in Western Canada. It examines the effects of a double price hike on ferry services within a year and evaluates tourist sensitivity to future price adjustments through surveys and demand modeling. The study analyzes data from secondary sources and primary surveys of mainland residents, emphasizing the importance of transportation costs as a critical factor in tourism planning and marketing strategies aimed at mitigating sensitivity to fare increases.

Paper For Above instruction

Transportation plays a vital role in the success of island tourism, where reliance on ferry services as primary travel links often dictates visitor numbers and satisfaction levels. In the context of Vancouver Island, the primary focus of this study, ferry fares have increased twice within a year due to reductions in government subsidies and rising operational costs. These fare hikes have prompted concerns about their impact on tourist demand, particularly in terms of elasticity—how sensitive tourists are to such price changes.

Pricing strategies in tourism are pivotal because they directly influence the decision-making processes of potential visitors. When transportation costs rise, they can act as significant barriers to travel, especially for pleasure travelers with fixed or limited budgets. Understanding demand elasticity helps tourism operators and policymakers forecast revenue impacts and develop strategies to counteract adverse effects. The concept of price elasticity involves calculating the percentage change in demand relative to changes in price, with demand considered elastic if demand varies significantly with price adjustments and inelastic if demand remains relatively stable.

The study investigates ferry demand by conducting surveys of mainland residents of British Columbia, who form a significant market segment for Vancouver Island tourism. The surveys assessed their anticipated trip frequency under different fare scenarios—specifically, a 20% increase and a 20% decrease in ferry fares. Results indicated that a majority of respondents would reduce their travel frequency by about 1.4 trips per year following a fare increase, demonstrating a degree of elastic demand. Conversely, a fare decrease was likely to increase trip frequency by approximately 1.9 trips, further confirming the elastic nature of demand within this market segment.

The calculated demand elasticity ratios, derived from the respondents' projected trip changes, suggest that demand for ferry services is notably sensitive to price variations. A 20% fare reduction could potentially increase demand threefold, while a similar fare increase results in a significant decline in trips. These findings have important implications for the ferry service providers and local tourism authorities, as they highlight the potential for revenue enhancement through strategic fare adjustments and promotional campaigns designed to stimulate demand during periods of fare increases.

Based on these insights, the tourism industry on Vancouver Island has adopted several strategic responses to mitigate the negative impacts of fare hikes. Short-term measures included discounts on accommodation and other trip components to compensate visitors for higher transportation costs. Long-term strategies focused on marketing the ferry ride itself as an integral part of the island experience, emphasizing the scenic and wildlife viewing opportunities along the route. Additionally, promoting special events and attractions, developing package deals involving high-speed ferries, and encouraging longer stays with combined trips were implemented to diversify and stimulate demand.

These strategic initiatives reflect an understanding of tourists’ perceptions and priorities, aiming to reduce price sensitivity and enhance value perception. For example, positioning the ferry journey as part of the overall island experience leveraging its scenic beauty encourages tourists to associate transportation costs with the enjoyment of the trip. Furthermore, developing multi-destination packages helps distribute transportation expenses across longer stays and multiple locations, making trips more appealing despite fare increases.

Furthermore, the study raises considerations about public policy and economic impacts. Elevated ferry prices can lead to reduced visitor expenditure, thereby affecting local businesses and government revenues through tax losses. The dilemma revolves around whether transportation services should operate solely on a revenue-generating basis or if subsidized pricing is justified to preserve broader economic benefits. Balancing profitability with community welfare remains a key policy challenge, especially as rising transportation costs threaten the competitive position of island destinations.

In conclusion, the research underscores that tourist demand for ferry services to Vancouver Island is elastic, with demand significantly responding to price changes. Stakeholders must consider demand elasticity when designing pricing policies, marketing strategies, and service innovations to maintain and grow tourism revenue. Combining fare management with marketing and package offerings offers a viable pathway to cushion the industry from fare increases and foster sustainable tourism growth on the island.

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