Tourist portfolio analysis model revisited – A risk/return approach

Abstract

Portfolio analysis is a well-researched area in management, particularly financial management. The key idea in portfolio analysis is that investors must consider their assets as a whole rather than individual. The principle of aggregating assets into a portfolio can be applied to the study of tourist market management in the tourism industry. This symbiosis is clearly beneficial since the tourism industry, which differs from many other economic activities, is subject to considerable instability of demand. Portfolio analysis can be an essential tool for tourist destinations in understanding, evaluating, and prioritizing the attractiveness of current and potential market segments, amid the heavily constrained marketing resources available. Extensive literature review shows that only a few scholars have suggested approaches of applying portfolio analysis to tourism. This paper aims to contribute to contemporary scholarship by suggesting a brand new portfolio analysis model to complement the existing ones, using the risk (fluctuation patterns of tourist arrivals) and return (per capita expenditure of tourists) relationship among multiple tourist-generating markets. Clear illustration is demonstrated by using the city of Macao as a case in point, a special administrative region of China, which has recently gained much international attention due to its gambling liberalization since the beginning of this century.