Substitution effect of tourism destinations in Türkiye: Case study of Iranian tourists

Abstract

This study investigates the substitution effect between the destinations of Iranian tourists who travel to Turkey, distinguishing between Istanbul and other touristic cities. For this purpose, it uses the Dynamic Linear Regression model in the class of time-varying parameters described in a State Space framework. The data are monthly 2018-1 to 2023-2 the results show that there is a dynamic relationship between the “number of incoming Iranian tourists to Istanbul” and “the number of incoming Iranian tourists to other destinations”. It seems that the opening of Istanbul's new airport and the diversification of flights to Turkish destinations have an important factor in the dynamics of the parameter. There is a substitution effect between Istanbul and other touristic destinations. Also, inflation (both Iran and Turkey) affects Iranians' travel behavior to Turkey due to two features: One is due to the decrease in the purchasing power of Iranians and the second is due to the change in the national currency of the two countries.