Tourism Demand and its Determinants

The objective of this research is to investigate the determinants of inbound tourism demand in Russia. To achieve this goal, the following points were elaborated: to survey the current state of international tourism and tourism industry in Russia, to define the basic concepts of tourism, to conduct a concise review of tourism demand literature, to select variables for an empirical model, to formulate research methods and to employ an econometric model to study the impact of selected factors on the inflow of foreign tourists in Russia. In this study, inbound tourism demand in Russian Federation from residents of 152 countries – main sources of Russian inbound tourism – for the period from 2010 to 2016 was analyzed. This research provides new evidence, that the income of tourists, population in tourism originating countries, exchange rate adjusted relative prices and the conditions of general infrastructure in Russia positively affect the number of tourist arrivals in the country. The estimated value of the income elasticity of demand is 1,31. The effect of the state of Russia’s tourism infrastructure and the Russian financial crisis of 2014 and 2015 on tourism demand is found insignificant in a fixed effects model. With the purpose to detect the changes in how a set of determinants affects tourism demand of residents from different countries, demand models were estimated for separate samples of countries selected on the basis of geographical location and CIS membership. The achieved results demonstrate the existence of a negative connection between the income demand elasticity and the distance from originating countries to Russia. The Russian economic state considerably affects tourism demand and contributes to the increase of tourist arrivals. The findings show, that this factor predominantly affects the demand of tourists from CIS countries. The results of this study can be applied for the further development of inbound tourism policy and planning in Russia.