Analysis of Japanese Tourist Demand to Guam

The economy of Guam is highly dependent on tourism. Japanese tourists are especially important as they represent on average 85% of all visitors. While frequent surveys document the preferences, demographics and satisfaction levels of the Japanese, no attempt has been made to determine how the traditional economic demand variables affect arrivals. This study attempted to determine the role of consumer income and prices in creating arrival demand. A single equation, error correction model was used to measure the short- and long-term elasticities of price and income. It was found that income elasticity was very high, while price was not especially significant. In addition, the repeat factor and several catastrophic events were found to be important in determining demand. These results led to a discussion of the theoretical implications regarding the economic and cultural underpinnings of Japanese tourism demand.