How Has the Current Recession Affected Demand for Overseas Travel for Different Consumer Groups, Based on the Income Elasticity of Demand?

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A STUDY ON THE CHANGE IN DEMAND FOR OUTBOUND TRAVEL DUE TO THE GLOBAL RECESSION, FOR RESIDENTS OF BANDRA, MUMBAI.

UNIVERSITY OF MUMBAI

LALA LAJPAT RAI COLLEGE OF COMMERCE AND ECONOMICS

MUMBAI, MAHARASHTRA

Submitted By: Dhruv Gupta

Class: TYBMS – A

V Semester

Project Guide: Prof. Arun Poojari

Academic Year : 2012-2013

CERTIFICATE

This is to certify that student of Third Year of Bachelors of Management studies: Div. A, Seat No. 000167, Mr. Dhruv Gupta, has successfully completed the project titled “A study on the change in demand for outbound travel due to the global recession, for residents
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The survey indicated an increase in demand for domestic travel; however this is a result of heavy marketing and not the recession. Low income households have a relatively income elastic demand for overseas travel.

Middle income households have substituted long haul destinations with short haul destinations, thereby indicating high cross price elasticity of demand. Households in this income category have also opted for low priced airline carriers and reduced expenditure at the destination itself.

High income households have not changed their choice of holiday destination. Instead, they have reduced the duration of their holiday. All other factors have remained constant as households are unwilling to compromise on the features of their holiday. Their demand for overseas travel is income inelastic. The analysis also showed the possibility of overseas travel being a Veblen good for the upper end of the high income group, where it is used as a status symbol to show that the household is unaffected by the recession.

Table of Contents

Introduction 8

Aims and objectives 12

Methodology 13

Economic theory 15

Research analysis 17

Limitations of research 30

Conclusion 31

Bibliography 34

Appendices:

Appendix 1 39

Appendix 2 43

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