Edited by Larry Dwyer, Alison Gill and Neelu Seetaram
Chapter 6: Discrete choice analysis and experimental design
Clive Morley NATURE OF THE TECHNIQUE AND ITS EVOLUTION Tourists make many decisions in determining their trip, and many of these decisions are intrinsically categorical, multinomial (many options are available) and unordered. For example, the choice of destination, of hotel, whether a particular attraction is visited or not, the mode of travel. Discrete choice theory provides an appropriate and sophisticated framework for analysis of the data at the level of individuals’ evoked responses, and one that has been proven to work well in practice. Forecasting for some strategic policy and marketing analysis purposes using aggregate level demand models can be problematical. For example, a special fare offer may not be reflected in the typical fare used in the model and the effects of changes in hotel room rates may be very imperfectly analysed through the medium of CPI changes (which is how tourism prices are usually measured in such models). Policy analysis can require the use of variables that are more directly related to those the potential tourist considers in making their choices. The methodology to model choices at the individual level is theoretically established (McFadden, 1984; Manski and McFadden, 1981; Hensher et al., 1988) and was successfully applied in areas such as transport economics and marketing (for example, Hensher and Johnson, 1981) before being readily applied to tourism demand and policy analysis (Louviere and Timmermans, 1990). Early tourism applications include Witt (1980, 1983) and Sheldon and Mak (1987). The methods of discrete choice analysis are sometimes referred to as...
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