EFFECTS OF INCOMES ON DOMESTIC TOURISM: THE CASE OF TUKUMS MUNICIPALITY

Overall, tourism has grown considerably in Latvia, and employment in the tourism industry, the direct contribution of tourism to the gross domestic product of Latvia and tourism exports have increased year by year as well. As technologies and infrastructures get more advanced and incomes of the population rise, people travel more today. As a result of the mentioned trends, tourism can generate extra revenue for the country as a whole and the municipalities. The research aims to examine the responsiveness of demand for domestic tourism services to a change in incomes based on the case of Tukums municipality. The research is based on a theoretical literature review of income elasticity of demand for tourism and described the supply of tourism services in Tukums municipality. Based on statistical data, the research verified the responsiveness of demand for domestic tourism services to a change in incomes. The research employed document analysis and statistical analysis for verifying causal relationships and making forecasts. At a high rate of income growth, the residents of Latvia prefer traveling to more distant tourist destinations than Tukums municipality, which is located in the middle of Latvia. The lower the income growth rate is, the more local tourists stay overnight in Tukums municipality.