Sources of demands for sex tourism in Amsterdam are both international and domestic. They are usually the leisure or business travelers. This illustrates that sex tourism is usually not the main purpose of a travel. It is a subset of leisure or business travel.
Travelers in Amsterdam are mainly the British and Dutch. They are the two largest tourism markets that make up a good third of all hotel bed nights in the city. (Appendix, Fig.1) The Americans market is of great importance to the sex tourism too. Even though the number of Americans visiting Amsterdam has dropped due to the economic crisis in United State, they constituted 11% of the total visitors in the city. The decreasing international arrivals have been compensated by the optimistic growth in domestic arrivals. This could probably be attributed to the local’s rising interest in short-stay hotel trips in the Netherlands. Furthermore, there is emergence of the new tourist markets and that includes the Asians and the Chinese from China. The number of arrivals from Asia and China increased significantly as compared to the previous year (Appendix, Fig.2).
Price Elasticity of Demand (PED)
The price elasticity of demand (PED) of sex tourism in Amsterdam is less than 1 and demand elastic. This shows that an increase in price would result in a more than proportional decrease in quantity demanded, ceteris paribus. The diagram on the left illustrates that the consumers are price sensitive; an increase in price from P2 to P3, results in a fall in demand from Q2 to Q3.
As mentioned earlier, sex tourism is the subset of leisure or business travel. Since it is not the main purpose of travel, it is not deemed as a necessity, thus the demand for sex tourism is elastic. Furthermore, there are always close substitutes to sex tourism in Amsterdam. These substitutes include sex tourism in other countries such as Belgium, sex clubs and also non-commercial forms of sexual relationships. In addition, traveling is still considerer a luxury good. With the impact of economic crisis felt, consumers would probably search for sexual services in their country and not overseas.
Income elasticity of demand (YED) of the sex tourism in Amsterdam is more than 1 and demand elastic. It shows that an increase in income would bring about a more than proportional increase in demand for sex tourism, ceteris paribus. Tourism is considered a luxury good. When the disposal income of the consumers increases, they would then travel more. For those on business trips, they are likely to see sex tourism as a want and not a need. They would not seek the service when their disposal income shrunk.
Cross elasticity of demand (XED) refers to the change in quantity demanded for sex tourism in Amsterdam when the price of substitute or complement changes, ceteris paribus. The substitutes would be referred to as the sex clubs or sex tourisms in other countries. XED is positive; an increase in price of the substitutes would result in an increase in quantity demanded for sex tourism in Amsterdam, ceteris paribus. However, with prostitution being legal in Holland, XED in terms of substitutes is relatively inelastic. This might be due to the fact that the quantity demanded for sex tourism is likely to be more affected by economic factors than the substitutes.
XED of sex tourism in Amsterdam for the complements is inelastic. XED is negative; an increase in price of the complements would lead to a less than proportional decrease in demand for sex tourism in Amsterdam. It is to be noted that the interdependency of the complements and sex tourism differ for different businesses. The nightclubs in Amsterdam would deem to have a greater interrelationship with the sex tourism than Condomerie, a shop selling unique condoms. However, XED in terms of complements would be inelastic as the interdependency is considerably low....