Edited by Nick Hanley, W. Douglass Shaw and Robert E. Wright
Chapter 7: Modelling Choice and Switching Behaviour Between Scottish Ski Centres
Geoﬀ Riddington, Colin Sinclair and Nicola Milne 1. INTRODUCTION A key element in appraising an investment is a forecast of the demand for the product or service. Often, when the market is relatively static, then the forecast revolves around the market share and particularly the way customers will switch from current purchase patterns to the new product or service. In turn this means that we need to develop an understanding of the way consumers choose their consumption patterns and to model the eﬀect of the factors underlying the choice. Over the last few years there has been considerable investment in the ski centres in Scotland and more, rather contentious, developments are planned. This chapter tries to identify the factors that determine the eﬀects of expenditure at a site by developing a model that quantiﬁes the relationship between the quality of the facilities, prices and the choice of individual skiers. The layout of the chapter is as follows. First, we brieﬂy examine the market for skiing in Scotland. Secondly, we look at the speciﬁcation and estimation of the chosen model, the Nested Multinomial Logit. Thirdly, we discuss the data, and speciﬁcally the estimation of potential expenditures for non-chosen sites. Fourthly, we examine the ﬁnal estimated models and the resultant implications for ski investment. Finally we discuss the role and limitations of the approach to investment in leisure activities. 2. THE MARKET FOR SKIING IN SCOTLAND Scotland has ﬁve ski centres; Glencoe, Nevis Range, Cairngorm, Glenshee...
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