Regional Tourism Demand in Lao PDR

The Tourism industry has made a significant contribution to the country's economic activities as they benefit from strong international tourist arrivals into Lao PDR. Over 80% of total international tourists to Lao PDR are major regional tourists from Thailand, Vietnam and China. This study investigates the demand of regional tourists from Thailand, Vietnam and China visiting the Lao PDR. Income, tourism price and substitution price are the factors that included in the tourism demand model. The sample period of the study is from 2005 - 2010. Bounds testing cointegration procedure or autoregressive distributed lagged model (ARDL) is used in the method. The result shows that income has a positive relationship with demand of Thai, Vietnamese and Chinese tourists to Lao PDR. Then, regional tourism in Lao PDR indicates that is a luxury service. On the other hand, substitution price has a positive relationship demand with Vietnamese tourists. However, it has a negative relationship demand with tourists from China. Therefore, Thailand is a competitor for basically the same tourism market with Lao PDR which is competing for tourists from Vietnam; but it is also a complementary tourism market with Lao PDR for China's tourists. This study suggests that Lao PDR should improve the infrastructure and develop new tourism destinations and products continuously. In addition, it should integrate the tourism market with Thailand for sustainable tourism in Lao PDR.