Discovering Optimal Tourist Market Mixes

Abstract

Tourism demand often fluctuates as a result of unexpected events, such as natural disasters, epidemics, and changes in economic conditions. This study applied the portfolio theory model to Japan’s inbound tourist markets and proposed optimal market shares by nationality. By comparing the growth rate (arrivals’ mean growth rate) and risk (uncertainty in growth rate of arrivals) associated with each departure country, we were able to suggest the optimal regional market shares of various portfolios for particular goals. This study sheds light on diversification in tourism markets and offers tourism authorities in Japan explicit guidelines for the long-term development of the country’s tourism industry. For example, to reach the highest reward ratio, tourism authorities should reallocate resources from the Taiwanese and American markets to the United Kingdom–Germany–France and Hong Kong markets. Japan’s tourism authorities can use the results of this research to review their long-term tourism policies.

Keywords

portfolio theory optimal market mix efficient frontier international tourism demand Japanese tourism industry tourism marketing

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