Transitare (Jul 2018)
Visiting friends and relatives tourism: the case of Uruguay
Abstract
In this paper, we analyze Uruguayans living abroad that visit Uruguay for their holidays,what in the literature is called Nostalgic tourism or Visiting friends and relatives (VFR) tourism.Several studies point Uruguay as one of the South American countries with the largestproportion of its population living abroad. In addition, tourism is a very important economicactivity in Uruguay. Visitors from Argentina have been always the majority in the Uruguayaninbound tourism. During 2017 in Uruguay 68% of total tourists were Argentinians, 12,5%Brazilians, and 8% VFR tourists. This last share was near 16% during the first decade of thiscentury and even higher in the XXth. century.We analyze and estimate the VFR tourism demand in Uruguay, and compare it withArgentinian tourist demand, since the majority of VFR tourists live in Argentina (64%). Aftercharacterizing VFR tourists, we apply Johansen methodology and built four models: two forVFR tourism and two for Argentinian tourism, considering monthly data for the number oftourists and quarterly data for tourists’ expenditure.Applying Johansen methodology, we found at least one Vector error-correction model(VEC) equation for each model considered. In the first two models (taking into accountthe number of tourists), the elasticities (income and prices) were smaller for VFR touristscompared with Argentinian tourists, meaning that the number of VFR tourists react less tochanges in income or relative prices than Argentinians. But in the case of tourists’ expenditure,the result was the opposite, with VFR tourists responding more to changes in prices orincome than Argentinians. Impulse response functions show a greater reaction of Argentiniantourists to changes in relative prices, but similar in the case of an income shock. Finally,forecasts show a good adjust of the forecast to actual data.
