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Tourism And Shopping

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This is a paper I wrote for my Tourism Development class in winter 2009 semester of which I received the highest grade ( 100/100) in the class. …

This is a paper I wrote for my Tourism Development class in winter 2009 semester of which I received the highest grade ( 100/100) in the class.
My professor commented that the paper was very organized and demonstrated my great research and analysis abilities.

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  • 1. Wu 1 Tourism and Shopping: How Does Exchange Rate Affect the Shopping Behaviors of Tourists? Tingting Wu Professor Miller HTM 380 2 April 2009
  • 2. Wu 2 As one of the major tourist activities in many destinations, shopping has played an ever increasing role in today’s travel itineraries. International shopping is becoming a common phenomenon because of improvements in information and technology brought about by globalization. For many tourists, shopping is one priority when they travel to distant lands. The exchange rate has a big impact on tourists’ shopping behavior. Tourists seek for benefits from favorable exchange rates and use the gains from exchange rates to justify their shopping behavior. Shopping can be part of the travel experience or the primary focus of travel. It has become one of the major motivations for a leisurely travel trip. It has been noted that tourists spend a significant amount of their budget on gifts and products while travelling (Huan 320). In fact, shopping is a major tourist activity with a high percentage of participation in the United States. According to the statistical data of the U.S. Office of Travel and Tourism Industries on tourism performance for 2007, shopping ranks as the top participation activity for Asian (90%) and Eastern European tourists (85%), the second participation activity for Europeans (86%) and Western Europeans (86%) (2007 Market Profile). The statistics indicate that the demand for shopping is high for European and Asian tourists. Detailed profiles for countries of origin show that shopping is on the top among all other tourist activities for the European countries of Ireland (93%), Spain (82%), and Italy (79%). Asian shopping participation percentages are the highest among all Asian countries with a 93% for Taiwan and 92% for Japan. China and South Korea also have shopping ranked on the top among all tourism activities with a percentage of 88% for China and 76% for South Korea. On the other hand, shopping ranks as the second tourist activity for tourists from the United
  • 3. Wu 3 Kingdom, France, Germany, and Sweden (2007 Market Profile). As these numbers demonstrate, tourist shopping is growing in its importance and domination as a top tourism activity for a destination such as the United States. It’s obvious that the demand for tourist shopping is rising based on the data provided by the Office of Travel and Tourism Industries. With the help of convenient transportation and accessible information, tourists not only satisfy shopping inside their home countries, but have stronger desire to travel abroad. A study entitled “ Shopping for Pleasure: The Development of Shopping as a Leisure Pursuit” indicates that the U.S. encountered the highest tourism expenditure on shopping in 2007, “ both in terms of money spent in the country by domestic and international tourists, and money spent aboard by U.S. citizens” (Euromonitor). As this evidence shows, shopping as a tourist activity has grown strongly in tourism industry. Tourist shopping has a potential to develop to be a large tourism activity because of its increasing demand. Although not all tourists view shopping as their main objective when travelling, tourists are motivated to do shopping by several important factors. In a research by the Department of Hospitality and Tourism Management of Purdue University, authors use Jansen-Verbeke’s study to demonstrate the four categories of shopping motivation. Tourists are taking advantages of unique goods provided or bargaining prices offered, being motivated by the exchange rate, purchasing goods with cultural identity, and shopping for gifts (Lehto et al. 321). These are important motivators for tourist shopping and there is much evidences that support Jansen-Verbeke’s statement. Tourists look for exciting opportunities to shop while travelling. They take advantages of
  • 4. Wu 4 the unique goods provided or bargaining prices offered. As a leisure activity, tourists seek for unique and interesting goods while shopping. These goods are usually unavailable or difficult to find in one’s home country. Some destinations provide special tourist shopping activities for tourists to shop for goods. In Taiwan, night markets are one of the major shopping attractions. In a research paper entitled “Shopping and Tourist Night Markets in Taiwan,” everyday shopping is said to account for 56% of the leisure activities (Hsieh and Chang 142). Night markets provide excellent opportunities for tourists to look for interesting goods because of active involvement of local merchants. In addition, night markets offer cheap products and bargaining prices which are affordable for tourists. Tourists can shop for a long time because they do not have pressure in comfortable and relaxed setting of the night markets. Besides taking advantages of goods provided, a favorable exchange rate is strong motivation for tourist shopping. Numbers of examples support this argument. According to the article entitled “Shopping for Pleasure,” the weakness of the U.S. dollar has brought millions of tourists to the U.S. in the last couple years. Tourists from Asia and Europe are typical consumers and New York is a top shopping destination for these two groups of tourists (Euromonitor). Another noticeable motivation for tourist shopping is cultural experience. According to the research on night markets in Taiwan, “International tourists demonstrate strong interests in experiencing their host nation’s culture and customs” ( Chang and Hsieh 143). Tourists feel a sense of participation by observing local culture and customs. They also participate in this culture by purchasing an item with cultural identity. In “1997 Shopping & Tourism Report”
  • 5. Wu 5 by the Office of Travel & Tourism Industries and The Taubman Company of Bloomfield Hills, it is illustrated that overseas travelers enjoy cultural tourism and ethnic heritage sites as part of their activities during their trips to the U.S. (1997 Shopping & Tourism Report). These travelers engage in shopping and cultural activities; they spend a significant amount of money on gifts and souvenirs. One example is that the Brazilian shopper spent about $58 per day on gifts and souvenirs (1997 Shopping & Tourism Report). Gifts and souvenirs are very demanding for tourists because they represent the destination’s identity and help to contribute to tourists’ travel experiences. Shopping for gifts is very common for tourists, especially when they travel overseas. Tourists strengthen their family and social ties by presenting gifts and souvenirs to relatives, friends, or colleagues (Lehto et al 321). In most destinations, there are gift shops that offer distinctive goods which promote local culture and custom. Tourists usually spend a great amount of money in gift shops. Tourists not only purchase gifts and souvenirs, but they shop for a large variety of goods. Price difference is one of the big lures for tourists. Anna Wesley states that “everybody is, as a matter of course, happy to avail themselves of the cheaper drinks, cigarettes, or perfumes offered duty-free on airports or ferry-boats, and nobody wants to miss buying items abroad which are known to be significantly cheaper than in their respective home countries” (8). Here it shows that common commercial goods like are popular for tourists, especially when they travel abroad. In addition, tourists have high demand for clothes, tobacco and wine, arts and handicrafts, and electronic products. According to a study on Taiwanese tourists’ shopping item preferences and shopping expenditure, clothing is on the top of the list among
  • 6. Wu 6 other purchased items, with an average 50% of tourists purchasing clothing. Tobacco and wine, arts and handicrafts, and electronic products are the second most demanded among product categories (Lehto et al. 326). This study demonstrates the important fact that clothing is high in demand for tourists. More evidence supports that clothing is a universal purchased goods for tourists. In fact, more and more tourists are arriving in the United States every year just for shopping; they spend a significant amount of money buying clothes. Metropolitan cities like New York, Las Vegas, Los Angeles, and Honolulu are favorite shopping destinations for tourists. They can purchase various types of clothes in those cities; however, the most favored type of clothing is brand-name. For those tourists who pursue fashion, getting clothing with renowned brand names is a big pleasure of the travel experience. In an article “Three Las Vegas Shopping Destinations” from Global Tourism Marketing Alliance, it is suggested that luxury products are big attraction for some travelers. “The Shoppes at The Palazzo draw high-end travelers accustomed to shopping on Rodeo Drive and Park Avenue. It features the city’s most impressive offering of contemporary designer boutiques, including Tory Burch, Catherine Malandrino, Christian Louboutin, Michael Kors, Burberry and Nevada’s only Barneys New York” (Shopping Destinations). As shown, tourist enjoy engaging in luxury brands and they are highly attracted by clothes those stores offer. Therefore, clothes are a major and the most favorite product category in tourists’ shopping list. With an increased demand for shopping, destinations now are working to provide advanced shopping facilities for tourists. Attractions are added, networks are built, and transportation systems are improved. Although tourists shop at different sites, large shopping
  • 7. Wu 7 centers like malls are big attractions. In Witold Rybczynski’s City Life, he writes that shopping malls are places for gathering people to work and play, shop and recreate, do community service and public protest, and perform various activities (210). He provides detailed information about Minnesota’s number one tourist attraction--- The Mall of America. “ The Mall of America is counting on attracting an average of about 100,000 people a day; this was exceeded during the first three months after its opening in August 1992, when nearly a million people a week visited the mall” (210). As shown, large malls are significant in a destination because tourists are attracted to shop in malls which have various offerings. According to Rybczynski, the Mall of America is made of four department stores, about 360 specialty stores, more than forty restaurants and food outlets, an amusement park, two theaters, and other smaller attractions (211). The author shows that the Mall of America not only offers tourists excellent shopping choices, but also provides various leisure activities. In addition to large malls, big cities like New York and Hong Kong are other famous shopping destinations. In fact, both cities are called “A Shopper’s Paradise.” For overseas visitors to New York and Hong Kong, shopping is the number one activity (Cook 271). New York and Hong Kong have a lot to offer for tourists because they are the leading financial cities of the world and both of feature diverse cultures. In fact, New York is the most popular destination in the United States for shopping tourism. The city offers the best and trendiest retail stores, coupled with New York’s proximity to Europe and a weak dollar all combine to attract hordes of European shoppers to the US (Weak Dollar Bringing More Europeans to the US). It is observed that many tourists come to New York just for shopping. On the other hand, Hong Kong offers unique shopping opportunities with its advanced infrastructure and a
  • 8. Wu 8 wide range of activities. Hong Kong has the world’s largest shopping center—the South China Mall, which [attracts ] “tourists with its 1,500 stores, water park, roller coasters, Imax theatre, cinemas and gondola rides” (Euromonitor). As the example shows, retailing and attractions mix bring demand for shopping and are essential to the success of shopping destinations. Tourists also engage in shopping activities with shopping festivals. Shopping festivals are created by countries to help with the economic growth by providing good quality products and services (Euromonitor). The same document reports that a growing number of tourists from all over the world come to shopping festivals in Hong Kong and Dubai (Euromonitor) . Shopping festivals thus have become big attractions of tourist destinations. Tourists are enticed to shop when they reach their ideal destinations, but perhaps the biggest motivator for increasing popularity of tourist shopping is the exchange rate effect. Tourists look for favored exchange rate and seek for benefits it brings. As the U.S. dollar and Hong Kong dollar depreciate, more tourists come to the U.S. and Hong Kong for shopping opportunities. Those tourists are characterized as spending a large amount of money on fine goods during short stays in their destinations. Shopping tourism to the U.S. is becoming popular in recent years because of the weakness of the dollar. After the recent depreciation of the dollar, large numbers of tourists have come from Europe, Asia, and neighbor countries coming to the U.S for shopping. An article published on Wall Street Journal illustrates that Europeans seek for price difference and make large purchases on brand goods. A tourist from Dublin expresses her happiness at being able to buy designer clothes that she wouldn’t dream of buying at home (Nelson and`
  • 9. Wu 9 Barnes). For Europeans, price difference of consumer goods is a big motivation for making trips to the United States. In the article published on America.gov, it’s suggested that coming to the United States is a bargain for people outside the country (Reynolds). This saying is well known among Europeans who think everything is cheap in the United States due to the weakness of the U.S. dollar. Europeans are benefiting from the exchange rate. In the article “With dollar low, U.S. is one big outlet,” it says that Europeans could get 1,500 dollars for exchange of 1,000 euros. With strong euro, European tourists “[spend] thousands to travel to the U.S. to bargain on everything from iPods to designer clothes and handbags” (Abelson). It can be supported that weak dollar increase consumption power of Europeans, which cause them to make large purchase in their trips to the United States. In fact, weak U.S dollar also attracts tourists coming to do holiday shopping. In the article “Hooray for weak dollar: Flood of tourists boosts retails’ holiday traffic,” it’s suggested that Europeans are making the most of the exchange rates and buying in multiples. Some Europeans travel with empty suitcase to do holiday shopping. On Black Friday in December 2007, an outlet store hosted 1,000 Europeans (Edelson, Sharon, et al.). As these evidence shows, tourists seek for benefits from exchange rate and justify their shopping behaviors. Besides large arrivals of European tourists to the U.S, there is seen an increasing number of tourists from Canada. The fact that Canadian dollar is on par with the American dollar motivates Canadian coming to the U.S for shopping. An article published on Fox Business on April 8, 2008 suggests that weak dollar pushes Canadian tourists to the U.S. border towns for shopping. These tourists generate large revenue for retails in malls in Buffalo (Sweet).
  • 10. Wu 10 The retail industry in Washington State is a big recipient of the benefits of the weak U.S. dollar. The opening of Seattle Premium Outlets helps to increase numbers of Canadian tourists, most of them came to Washington to shop (Halpert). As the U.S. dollar depreciates, trips to the U.S. are more affordable for Canadian tourists. Thus, the favorable exchange rate increases shopping activities of Canadian tourists and their spending power. Favored exchange rate draw shoppers from European countries and Canada to the United States; at the same time, there are large numbers of tourists arriving in Hong Kong from the Mainland China. There are many factors drawing tourists from the Chinese Mainland to Hong Kong, but shopping is a prominent factor (Law and Au 241). Well-known as “shopping paradise”, Hong Kong offers exceptional shopping items for their attractive price, a variety of goods, and good quality (Wong and Law 405). These reasons motivate tourists from the Mainland to go to Hong Kong for shopping. Research on shopping satisfaction levels of tourists in Hong Kong, it shows that “shopping accounted for 64.7% of the total expenditure of Mainland Chinese tourists” (Wong and Law 402). Many evidence support that shopping is a popular tourist activity among tourists from Mainland. Since China’s economy has grown to be the second largest in the world in 2007, the Chinese currency has been strengthening. The Hong Kong dollar has especially weakened against the RMB. One( 1) Hong Kong dollar traded more than one (1) RMB several years ago, now it only trades under .90. As the RMB appreciates in value, Mainland interest in Hong Kong also increases. A news entitled “RMB value turns Hong Kong into holiday hotspot” published on China Daily suggests that Chinese find shopping more attractive since the RMB’s value has overtaken the Hong Kong dollar. Mainland residents are taking
  • 11. Wu 11 advantage of the rising RMB and increasing their travels to Hong Kong. In addition, the rise of RMB increases purchasing power of Mainland residents. They have the preference for fashion products, luxury goods, and new brands. The research on shopping behavior of individual tourists from the Chinese Mainland to Hong Kong suggests that a large percentage of the Mainland visitors spend about one to two thousand RMB on high-fashion products (Choi et. al ). Mainland tourists also have brand preference and tend to purchase newer brands. As the RMB continues to appreciate, Mainland tourists can afford more luxury goods and enjoy their tourist experience in Hong Kong. As previous examples show, shopping is one of the most popular activities in many destinations. Shopping helps destinations to be more attractive and helps retail industry of the destinations to grow. Exchange rate greatly influences tourists shopping activity as tourists seek to take the advantage of favorable exchange rate. Shopping has the potential to become a top tourist activity as economy in developing countries grow and contribute large market to tourist industry worldwide.
  • 12. Wu 12 Works Cited Abelson, Jenn. With Dollar Low, US Is One Big Outlet. 24 Nov. 2007. 24 Mar. 2009. <http:// www.boston.com/business/articles/2007/11/24>. Choi, Tsan-Ming et al. "Shopping Behaviors of Individual Tourists from the Chinese Mainland to Hong Kong." Tourism Management 29 (2008): 811-820. Cook, Roy A., Laura J. Yale, and Joseph J. Marqua. Tourism: The Business of Travel. New Jersey: Pearson, 2006. Edelson, Sharon, et al. “ Hooray for weak dollar: Flood of tourists boosts retailer’s holiday traffic.” WWD: Women’s Wear Daily 194. 117 (04 Dec. 2007): C-C. Business Source Premier. EBSCO. [ Joseph Smith Library], [ Laie], [ HI]. 24 Mar. 2009. Euromonitor. Shopping for Pleasure: The Development of Shopping as a Leisure Pursuit. (27 May 2008). Global Market Information database. Joseph F. Smith Library, Laie, HI. 24 March, 2009. Halpert, Oscar. Weak Dollar Pulls in Strong Canadian Loonies. 6 June 2008. 30 Mar. 2009. <http://www.enterprisenewspapers.com/article/20080606>. Hsieh, An-Tien, and Janet Chang. "Shopping and Tourist Night Markets in Taiwan." Tourism Management 27 (2006): 138-145. Jackson, Candace. "Land of the Spree." 15 Dec. 2007. Rpt. in ProQuest. New York. 2007. Law, Rob, and Norman Au. "Relationship Modeling in Tourism Shopping: A Decision Rules Induction Approach." 21 (2000): 241-249. Lehto, Xinran Y. et al. "Tourist Shopping Preferences and Expenditure Behaviors: The Case of the Taiwanese Outbound Market." Journal of Vacation Marketing 10.4 (2004):
  • 13. Wu 13 320-332. Nelson, Emily, and Brooks Barnes. "As Dollar Declines, Europeans See U.S. as Big Half-off Sale; Visiting Britons Grab Deals on Fake-fur Vests, IPods; Ritz Serves Mutton Stew." WallStreet Journal . Rpt. in ProQuest. 2009. Reynolds, Victoria C. “ Record Numbers of Overseas Visitors Coming to United States.” 25 July 2008. 23 Mar 2009. <http://www.america.gov/st/econ-english/2008/July>. Rybczynski, Witold. City Life. New York: Scribner, 1995. Sweet, Ken. “Weak Dollar Sends Canadian Tourists Flocking to U.S. Border Towns.” Foxbusiness. News America Group. 25 Mar 2009.<http://www.foxbusiness.com/privacy.html>. “Three Las Vegas Shopping Destinations From Global Tourism Marketing Alliance” For Immediate Release. 24 July 2008. e Turbo News. 21 March 2009. <http://forimmediaterelease.net/pm/1639.html >. United States. Office of Travel and Tourism Industries. 1997 Shopping & Tourism Report. 26 Feb 2009. 28 Mar 2009. <http://tinet.ita.doc.gov/cat/f-1996-11-510.html>. United States. Office of Travel and Tourism Industries. 2007 Market Profile. 2007. 25 Mar 2009. <http://www.tinet.ita.doc.gov/outreachpages/download_data_table>. Wessely, Anna. "Travelling People, Travelling Objects." Cultural Studies 16.1 (2002): 3-15. Wong, James, and Rob Law. "Difference in Shopping Satisfaction Levels: A Study of Tourists in Hong Kong." Tourism Management 24 (2003): 401-410.

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