Price competitiveness of tourism packages to Australia: Beyond the “Big Mac” index

One issue facing any country or region concerns its price competitiveness as a package tour destination. One method of measuring this is to use what in other contexts has been referred to as the Big Mac approach. The “Big Mac” is a simple product with ingredients in fixed proportions, whereas the tourism product is a very complex one comprising different components depending on tourist expenditure patterns. There is no equivalent tourism product offered across countries, as the nature of the product is tailored to the origin market, expenditure levels and the length of the trip involved. The key issue is that of how to standardize the products being compared, so as to determine their relative price competitiveness. A method of constructing price competitiveness indexes, developed by the authors, can be applied to develop measures of the price competitiveness of different tour packages. This paper has three aims: To set down the essence of the preferred approach to measuring price competitiveness, noting its advantages and limitations; to employ this approach to construct price competitiveness indexes for package tours to Australia from Japan and the USA; and to indicate areas for farther research into the price competitiveness of package tourism worldwide.