Author

Shoora Beer Paudyal

Abstract

A number of factors such a snowy mountains, beautiful landscape, and cultural monuments are the main attractions for visitors to Nepal. Tourism is one of the major contributors to foreign currency receipts in Nepal. Both the number of visitors and of hotel beds are increasing, however, the increase in the former is less than that of the latter. This paper is a study of demand determinants of Nepalese tourism. The tourist flow from 14 major sending countries is used in the study. The period examined is 1974-1991 and variables used include GDP per capita in constant 1985 US dollars, population of the sending countries, air distance between one of the major cities in each sending country and Kathmandu airport, airfare in US dollars from Kathmandu to each sending country’s main airport, real exchange rates between sending country and Nepal, and the consumer price index in constant 1980 prices. The log linear model is selected for the study after a comparison with the linear model. The regression analysis is carried out using generalized least squares for panel data and the White covariance consistence matrix procedure for individual time series. A specific model for each individual country is examined. The results indicate that all the variables considered are important determinants of tourism demand in Nepal. Above all income variable is highly significant variable in cases of both India and overseas arrivals. Besides, relative exchange rates between India and Nepal is greatly important variable.