Measuring price elasticities of demand for outbound tourism using competitiveness indices |
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| Affiliation: | 1. Bournemouth University, UK;2. Monash University, Australia;3. Southern Cross University, Australia;4. University of Ljubljana, Slovenia;5. Griffith University, Australia;6. University of New South Wales, Australia;1. Department of Hospitality Management, School of Tourism, Ming Chuan University, Taipei, Taiwan;2. Graduate Institute of Tourism Management, School of Tourism, Ming Chuan University, Taipei, Taiwan;1. Thai Ministry of Finance, Thailand;2. Mahidol University International College, Thailand;1. School of Hotel and Tourism Management, The Hong Kong Polytechnic University, Hong Kong;2. Department of Marketing, Faculty of Economics, University of Alicante, Spain;1. Department of Economics and Political Science, University of Aosta Valley, Grand Chemin 75/77, Saint Christophe 11020, Italy;2. CERTeT, Bocconi University, Roentgen 1, 20136 Milan, Italy;3. Department of Economics and Management, University of Pavia, Via S. Felice 5, 27100 Pavia, Italy |
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| Abstract: | The real exchange rate (REX) has long been used as the proxy for prices in tourism demand models. However it has limitations, particularly when it comes to models of outbound tourism. As an alternative, a price competitiveness index (PCI) is developed and used as a proxy for prices in a model of outbound tourism from Australia. Results obtained show that while REX is statistically insignificant and yields a price elasticity of −0.002, PCI is significant and generates a price elasticity of −1.07. The results obtained show that PCI outperforms REX as the preferred price variable in modelling outbound demand on both theoretic and empirical grounds. Furthermore, this index can be used to monitor the inter-temporal competitiveness of a destination. |
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| Keywords: | Price competitiveness index Outbound tourism Dynamic panel data Price elasticity Australia |
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