Asia Pacific Journal of Tourism Research, Vol. 12, No. 2, June 2007

Analysis of Japanese Tourist Demand to Guam
James W. DouganÃ
V. P. Finance & Administration SandCastle, Inc., Guam, USA

The economy of Guam is highly dependent on tourism. Japanese tourists are especially important as they represent on average 85% of all visitors. While frequent surveys document the preferences, demographics and satisfaction levels of the Japanese, no attempt has been made to determine how the traditional economic demand variables affect arrivals. This study attempted to determine the role of consumer income and prices in creating arrival demand. A single equation, error correction model was used to measure the short- and long-term elasticities of price and income. It was found that income elasticity was very high, while price was not especially significant. In addition, the repeat factor and several catastrophic events were found to be important in determining demand. These results led to a discussion of the theoretical implications regarding the economic and cultural underpinnings of Japanese tourism demand. Key words: tourism demand, econometric, error correction model, Guam, elasticities

Introduction
The economy of Guam is highly dependent on tourism as one of its most important sources of income. While much antidotal information has been collected, recurrent and rigorous econometric analyses have not been done to gain more insight into what brings visitors to Guam. On average, Japanese arrivals have represented 80 –85% of all tourist arrivals over the past 15 years (Table 1). Several crises over the past few years have severely curtailed tourist arrivals to Guam, leading to a crippling slowdown in the local economy,
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which has led to high unemployment rates and deteriorating infrastructure conditions. The purpose of this study was to gain an understanding of the determinants of Japanese demand in order to provide government policy-makers and tourism