Stochastic Multivariable Approach to Modelling Tourism Area Life Cycles

Butler's (1980) tourist area cycle of evolution is re-examined by its application to the Dead Sea resort area in Israel. The objective of the study is to examine the validity of the model's tourism life cycles curve while using a stochastic regression expression that should not necessarily yield to the logistic curve suggested by Butler. The regression model is a compound of endogenous and exogenous variables incorporated in an interactive manner with the temporal development process. Monthly bed-night data for the years 1974–2000 are used as a measure of demand. Besides time, accumulated investment in terms of hotel rooms is applied as an endogenous variable and a security indicator is applied as an exogenous variable. The suggested interactive regression was found to perform better (R =0.92) than the temporal expression (R =0.70). Despite the selection of a stochastic flexible model, the Dead Sea development pattern was found to conform to Butler's tourist area cycle of evolution model.