The effect of fuel price rises on tourism behaviour: An exploratory Australian Study

Abstract

Faulkner (2001) and Prideaux et al. (2003) note there are an increasing number of disasters, crises and shocks which affect the tourism industry, ranging from natural to human influenced disasters. Despite the potential influence of disasters, crises and shocks on the tourism industry, Faulkner (2001) argues that there is a lack of research on such phenomena. Coombs (1999) notes, all crises are different and crisis managers need to tailor responses to individual crises rather than try to plan for every individual situation. However, such a response requires access to information on which to base decision making. Collecting data on the potential impact of crises or shock events (such as fuel price increases) on potential tourism demand is critical to enable destination managers to respond appropriately. As Ritchie (2004: 674) suggests “problem recognition through environmental scanning and collecting data on the political, economic, social and technological environment can provide information on possible trends and their likely impacts on the organisation.” Tourism is extremely susceptible to changes in economic patterns including exchange rates and levels of disposable income. In times of recession or global down turns patterns of tourism may decline and destinations and organisations may have to deal with a drop in demand and visitation. In the last 12 months the price of oil has risen in many Western countries causing some concern for the tourism industry due to potentially rising transport costs. This paper outlines an exploratory study undertaken on a random sample of 640 Australian’s to examine whether fuel prices had any actual or proposed impact on travel demand and behaviour. The research was undertaken in September 2005 several months after fuel price rises began to increase. The data would suggest that the impact of fuel price rises are not as dramatic as the popular media would suggest. In terms of past holiday behaviour, ninety six of the 640 respondents (15%) took holidays recently but modified their behaviour because of the increasing price of fuel. They employed a range of spending strategies to deal with these increased prices. However, it can also be noted that 223 respondents (70% of those that recently took holidays) were not impacted in any way by changes in fuel prices in their recent holidays. The disparity between the actual behaviour (30% changed) and the forecast behaviour (1% plan to change) may be a function of either the optimism of the respondents (they don’t think that the rising prices will impact them) or that they have grown accustomed to the price increases and thus have altered their mind set and travel plans accordingly. This is a critical point and will be further explored in subsequent stages of this research. It is worth noting that only 1% of respondents or 10% of those who are changing their plans are doing so explicitly because of the increasing price of fuel. Further analysis, focussing on the explicit behaviours of those intending to holiday and fuel price shocks’ impact on their plans will be reported.