Estimating the effect of overcrowding on tourist attraction: The case of Canary Islands

This paper analyzes the influence of the tourist’s perception of overcrowding on a destination’s appeal. To do so, the use of the population density estimates is suggested to measure degrees of overcrowding in a tourist area, which in this paper is undertaken using panel data analysis. A tourist demand model is estimated in the study case, which consists of a number of resorts located in five islands of the same archipelago, Canary Islands. This distinctive case of close but different destinations makes it possible to isolate variations in demand due to changes in population density and other supply-side factors from other demand-oriented ones. Annual tourists coming from two different European countries to the islands were considered as endogenous variables. The empirical findings provide an indicator of each island’s maximum capacity and test some policy measures laid down to extend these limits. The estimation of the effect of population density on demand can serve as a useful tool for planning the future development in destinations where tourist attraction is mainly based on the natural values of the site.