The objectives of this study are as follow: (1) Construct a foreign tourist accommodation demand system for international hotels in Taiwan. (2) Estimate price elasticity of foreign tourists to international hotels in Taiwan. (3) Comprehend the effects of seasonal changes and other external factors impacting foreign tourists who stay at international hotels in Taiwan. According to the demand theory and assuming rational consumers exist in the marketplace, this research employs the most effective premise of establishing a standard price level under a particular budget limit so that the best consumption combination can be found. Individual products? demand levels within the demand system are affected by all other product prices and expenditures. If the consumer wishes to increase the accommodation consumption in one location, then the consumer?s accommodation needs in other locations must be affected as well. Based on the foreign tourist information gathered from 1999 to 2006, this research is divided into 5 major areas in Taiwan and establishes the empirical model for the demand system of foreign tourists to Taiwanese international hotels. By means of indirect setting of the avail and the first-order differential approximation, the research derives at a constant flexibility demand system. It then adds the factors of seasonal changes and external impact variables, and employs seeming unrelated regression to obtain the estimation parameters. Using Root-Mean-Square-Error (RMSE) analysis, this research compares the about result and the demand system without the seasonal changes and external impact variables to conduct model simulation capability comparison. The results show that information from demand system with seasonal changes and external impact variables is most acceptable; that is, the demand system of foreign tourists who come to stay at Taiwanese international hotels is significantly affected by seasonal changes and external impact variables.
