The impact of relative prices on tourism demand for Mauritius: An empirical analysis |
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| Authors: | Boopen Seetanah Raja Sannassee Sawkut Rojid |
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| Institution: | 1. Associate Professor, Department Finance and Accounting, University of Mauritius, Reduit, Mauritiusb.seetanah13@gmail.com;3. Associate Professor, Faculty of Law and Management Finance and Accounting, University of Mauritius, Reduit, Mauritius;4. Freelance economic consultant, Riviere Du Rempart, Mauritius |
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| Abstract: | The present study assesses the impact of relative prices on tourism flows in Mauritius. To account for dynamism in tourism flows modelling, a dynamic time series analysis – namely the vector autoregressive model – is employed. The results show that relative price measures have a long-run impact on international tourism flows, indicating that tourists are sensitive to price levels. The relative average cost in the different competing destinations is also reported to be positive and significant, indicating that the impact of relative price changes in foreign destinations competing with Mauritius tourism matters; thus indicating a certain degree of substitutability between Mauritian and its regional competitors’ tourism. Tourism infrastructure, income in country of origin and the island's level of development are confirmed to be key factors in the tourist selection decision. Finally, overall, short-run estimates confirm the above results. |
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| Keywords: | relative prices tourism demand vector autoregressive model demand elasticity |
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