Tourism Economics
Prerequisites consist of knowledge of the basic concepts of economic theory and some elementary mathematics and statistics. Passing the Economics exam is a prerequisite for the Tourism Economics exam. It is not mandatory, but helpful, to have passed the Social Statistics exam.
The exam is written. The questions, which are open-ended, may involve the statement of definitions, exposition of concepts, illustration of economic models, and commentary on data tables. The objective is to assess the ability to read and interpret economic phenomena and problems of the tourism sector through the tools of economic analysis. The evaluation criteria take into consideration the ability to illustrate clearly and rigorously, with the help of graphs (no mathematical formulas are required), the purposes, assumptions and results of economic models; the ability to read, organize and interpret data and information on tourism; the correct and knowledgeable use of technical terms; and the ability to connect problems and issues examined with theoretical models to concrete cases.
The written exam consists of six questions, three for each part of the course, and the student must answer, in 90 minutes, four questions, two for each part of the course. For the purpose of the final grade, all questions carry equal weight and no more than four questions may be answered. As a rule, students who pass the written test are offered a grade by the examination committee to be verbalized. However, if the committee needs to - in order to refine the final grade - it asks the student to supplement the written test with a short oral interview. To both students who have passed the written test and (even more so) those who have failed it, the committee provides an explanation of the evaluation criteria used in awarding the final grade.
The course aims at providing the information framework, logical frameworks and a basic knowledge of economic models useful for understanding the functioning of tourism markets through the analysis of the interactions between tourists, accommodation and transportation firms, public agencies responsible for managing tourism policies and the territory. The teaching is divided into two parts.
The first part (lecturer: Umberto Galmarini) is dedicated to the economic analysis of the competitive strategies that tourism firms (hotels, airlines, etc.) use to maximize their revenues through the so-called "revenue management" techniques, which are expressed through horizontal and vertical differentiation of tourism services, temporal price differentiation (last minute), overbooking, and reservation management. The training objective is to provide the student with the opportunity to acquire an adequate critical awareness of the logic and mechanisms underlying the revenue management strategies that tourism businesses also implement through dedicated management programs and algorithms.
At the end of the first part of the teaching, the student will be able to:
1. Interpret the strategies adopted by tourism firms to compete in the market from a revenue management perspective.
2. Describe how tourism firms use the strategic levers at their disposal (price differentiation, articulation of service quality) in accordance with revenue maximization.
3. Apply simple revenue management strategies and algorithms through the use of programs in Excel to simulate price and reservation management.
The second part of the course (lecturer: Giuseppe Porro) examines, from a macroeconomic perspective, the economic dimensions of the tourism sector and the role of tourism as a driver of the economic system and economic development. The discussion of general themes is accompanied, to give concreteness to the exposition, by the analysis of some 'case studies'. Indeed, the ability to read and interpret tourism phenomena even at an aggregate level constitutes a type of transversal competence for all the professional figures that the course of study aims to train.
At the end of the second part of the teaching, the student will be able to:
1. Describe the macroeconomic phenomena affecting the tourism sector, discussing its dynamics and policies, both nationally and internationally.
2. Discuss autonomously, using appropriate technical language, 'case studies' on the issues of sustainable tourism and tourism development policies in the area.
3. Use the main sources of statistical information on tourism flows, organizing data in form of tables and graphs, interpreting the evidence according to the purposes of the analysis.
FIRST PART (25 hours, Umberto Galmarini)
1. The two dimensions of the tourism product: heterogeneity and plurality. The demand function of a tourist destination and the various types of "tourism".
2. The problem of coordination of activities in a tourist destination: basic case of a monopoly market and general case of an oligopoly market with horizontal differentiation of tourist services.
3. Price, quality, crowding, and demand in a tourist destination: the case of "escape from the crowd" and the case of "attraction for the crowd."
4. Markets and economic efficiency: consumer-tourist surplus, cost structure of providing tourism services, number of enterprises operating in the market.
5. Revenue management, competition and efficiency in oligopoly. Vertical differentiation of the tourism product. Temporal price differentiation and last minute.
6. Revenue management in reservation management. Analysis of a model and use of software for strategic reservation management.
7. Trust and Reputation in the Sharing Economy: the Airbnb case.
SECOND PART (25 hours, Giuseppe Porro)
1. Macroeconomic analysis of tourism. The tourism multiplier model. The role of tourism in the development of a destination.
2. International tourism and the role of the exchange rate: analysis of the issues of international tour operators and hotel chains. The role of currency flows in the balance of payments.
3. Direct determinants of international tourism flows: diversity of environmental resources, market factors.
4. The indirect determinants of tourism flows: the Ricardian model of comparative advantages, the Hecksher Ohlin model, and economies of scale.
5. The indirect determinants of tourism flows: the center-periphery model.
6. The debate on the relationship between tourism and the environment: Sustainable tourism and ethical tourism.
8. Tourism, externalities and market failures. Public goods and evils in tourism production. State intervention and the public organization of tourism.
9. Case studies.
The course includes 50 hours of face-to-face lectures, delivered entirely by the two lecturers. Some lectures are devoted to exploration of statistical sources on tourism offered by institutional sites, presentation and discussion of case studies, and use of programs to simulate revenue management techniques.
The main reception time is scheduled on the sidelines of classes.
Additional reception times may be arranged by prior e-mail contact with the lecturers at umberto.galmarini@uninsubria.it
giuseppe.porro@uninsubria.it