Vacation Homes in SIDs: A Demand Approach

The purpose of this research is to investigate consumer preferences for vacation homes in a small island destination (SID). Many SIDs have welcomed the expanding phenomenon of vacation homes in response to demands to diversify... [ view full abstract ]

The purpose of this research is to investigate consumer preferences for vacation homes in a small island destination (SID). Many SIDs have welcomed the expanding phenomenon of vacation homes in response to demands to diversify their tourism products. This is the case of the Caribbean, where the present-day investment climate for vacation homes is positive and the region is reporting increased sales in most tourism markets. Regrettably, the vacation home market, similar to the traditional real estate market, is still approached from a production orientation rather than a consumer marketing orientation. This omission presents a challenge for most SIDs, as the vacation home market represents a very intricate category encompassing distinctive economic and non-economic factors.

Previous studies about vacation homes indicate that most developers have insufficient consumer knowledge with respect to the buying decision for a vacation home and are unable to adequately serve the customer’s needs. Therefore, the current study deviates from the existing literature by investigating consumers’ stated preferences for a vacation home. The study employed a conjoint experiment in which potential buyers express their hypothetical preference for a new home in the island of Aruba. The study identified six vacation home attributes with 19 unique levels that formed a symmetrical factorial experiment. A total of 189 qualified vacation home buyers were interviewed onsite while visiting Aruba.

The results of the conjoint analysis reveal a strategic mapping of the most important vacation home attributes listed in order of importance and include: price, location, amenities, services, and type of dwelling. The results also suggest that demographic characteristics rather than familiarity with the destination influence the ranking of the attributes. The research findings may assist destination managers in a small island destination when evaluating development plans for vacation homes thereby facilitating a more efficient allocation of resources. The study concludes by suggesting that a demand approach is an obvious requirement in small island tourism development in order to prevent unnecessary waste of scarce resources.