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Measuring price elasticities of demand for outbound tourism using competitiveness indices

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  • Seetaram, Neelu
  • Forsyth, Peter
  • Dwyer, Larry

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.

Suggested Citation

  • Seetaram, Neelu & Forsyth, Peter & Dwyer, Larry, 2016. "Measuring price elasticities of demand for outbound tourism using competitiveness indices," Annals of Tourism Research, Elsevier, vol. 56(C), pages 65-79.
    • Handle: RePEc:eee:anture:v:56:y:2016:i:c:p:65-79
    DOI: 10.1016/j.annals.2015.10.004
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    2. Tay T. R. Koo & David Tan & David Timothy Duval, 2018. "The Effect of Levels of Air Service Availability on Inbound tourism demand from Asia to Australia," Advances in Airline Economics, in: Airline Economics in Asia, volume 7, pages 145-167, Emerald Group Publishing Limited.
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    7. Jong, Meng-Chang & Hong, Puah & Arip, Mohammad Affendy, 2020. "Modelling Tourism Demand: An Augmented Gravity Model," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 54(2), pages 105-112.
    8. Sylvain Petit & Neelu Seetaram, 2019. "Measuring The Effect Of Revealed Cultural Preferences On Measuring The Effect Of Revealed Cultural Preferences On Tourism Exports," Post-Print hal-01924443, HAL.
    9. Khandokar Istiak, 2023. "Psychological factors of Canadian and Mexican tourists and the US tourism sector," Tourism Economics, , vol. 29(5), pages 1328-1354, August.
    10. Nikeel Kumar & Ronald Ravinesh Kumar, 2020. "Relationship between ICT and international tourism demand: A study of major tourist destinations," Tourism Economics, , vol. 26(6), pages 908-925, September.
    11. Zuzana Gajdošíková & Tomáš Gajdošík & Jana Kuèerová, 2019. "Slovak winter tourism festinations: future playground for tourists in the Carpathians," Tourism and Hospitality Management, University of Rijeka, Faculty of Tourism and Hospitality Management, vol. 25(1), pages 161-178, May.
    12. Thomas KRABOKOUKIS & Serafeim POLYZOS, 2022. "Drawing An Indicator Of Tourism Competitiveness And Examining Its Relationship With Tourism Seasonality For The Greek Prefectures," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(2), pages 55-70, June.
    13. Alderighi, Marco & Gaggero, Alberto A., 2019. "Flight availability and international tourism flows," Annals of Tourism Research, Elsevier, vol. 79(C).
    14. Serdar Ongan & Cem Işik & Dilek Özdemir, 2017. "The Effects of Real Exchange Rates and Income on International Tourism Demand for the USA from Some European Union Countries," Economies, MDPI, vol. 5(4), pages 1-11, December.
    15. Mengmeng Qiang & Manhong Shen & Huiming Xie, 2019. "Cultural diffusion and international inbound tourism: Evidence from China," Tourism Economics, , vol. 25(6), pages 884-903, September.
    16. Koo, Tay T.R. & Lim, Christine & Dobruszkes, Frédéric, 2017. "Causality in direct air services and tourism demand," Annals of Tourism Research, Elsevier, vol. 67(C), pages 67-77.
    17. Chow, Clement Kong Wing & Tsui, Wai Hong Kan & Wu, Hanjun, 2021. "Airport subsidies and domestic inbound tourism in China," Annals of Tourism Research, Elsevier, vol. 90(C).
    18. Croes, Robertico & Ridderstaat, Jorge & Shapoval, Valeriya, 2020. "Extending tourism competitiveness to human development," Annals of Tourism Research, Elsevier, vol. 80(C).
    19. Anushiya Sireeranhan & Jeyapiratheepa Antonarulrajah & EA Selva Selvanathan & Saroja Selvanathan, 2017. "Modelling the inbound tourism demand in Sri Lanka," Discussion Papers in Economics economics:201705, Griffith University, Department of Accounting, Finance and Economics.
    20. Peter Josef Stauvermann & Ronald Ravinesh Kumar, 2017. "Modeling economic growth with tourism for small open economies," Metroeconomica, Wiley Blackwell, vol. 68(4), pages 1001-1018, November.
    21. Falk, Martin & Lin, Xiang, 2018. "Sensitivity of winter tourism to temperature increases over the last decades," Economic Modelling, Elsevier, vol. 71(C), pages 174-183.
    22. Sylvain Petit & Neelu Seetaram, 2018. "Measuring the Effect of Revealed Cultural Preferences on Tourism Exports," Post-Print hal-02133249, HAL.
    23. Bontemps, Christian & Martini, Gianmaria & Porta, Flavio, 2024. "The Effects of LCCs Subsidies on the Tourism Industry," TSE Working Papers 24-1540, Toulouse School of Economics (TSE).
    24. Gabriela Carmen Pascariu & Bogdan-Constantin Ibanescu, 2018. "Determinants and Implications of the Tourism Multiplier Effect in EU Economies. Towards a Core-Periphery Pattern?," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 20(S12), pages 982-982, November.

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