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Economics of Leisure and Non-Leisure Tourist Demand: A Study of Domestic Demand for Australian Tourism

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  • Sarath Divisekera

Abstract

This article analyses the economic determinants of demand for tourism goods and services by Australian households distinguished by the travel motives of leisure and non-leisure. Using tourist consumption data collected through quarterly national visitor surveys, two systems of demand equations are estimated, based on the almost ideal demand system and incorporating seasonality. The study aggregates itemized tourist expenditure data into five broad commodity groups: accommodation, food, transportation, shopping and entertainment. The estimated models obey the basic postulates of consumer theory – homogeneity and symmetry. Overall, demand for the five commodity aggregates is found to be price inelastic, while the degree of price sensitivity varies across the commodity aggregates and between the two types of tourists. In general, demand by leisure tourists is found to be more sensitive to price than demand by non-leisure tourists. The cross-price elasticities derived from both models reveal a gross complementarity of demand, implying that tourists' overall utility depends on the joint consumption of a bundle of goods and services. The observed price-inelastic demand, coupled with the apparent complementarity of demand, may reflect the possibility that latent price sensitivity is associated with tourist demand.

Suggested Citation

  • Sarath Divisekera, 2010. "Economics of Leisure and Non-Leisure Tourist Demand: A Study of Domestic Demand for Australian Tourism," Tourism Economics, , vol. 16(1), pages 117-136, March.
    • Handle: RePEc:sae:toueco:v:16:y:2010:i:1:p:117-136
    DOI: 10.5367/000000010790872132
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    References listed on IDEAS

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    1. Juan L. Nicolau & Lorenzo Masiero, 2013. "Relationship between Price Sensitivity and Expenditures in the Choice of Tourism Activities at the Destination," Tourism Economics, , vol. 19(1), pages 101-114, February.
    2. Saayman, Andrea & Viljoen, Armand & Saayman, Melville, 2018. "Africa’s outbound tourism: An Almost Ideal Demand System perspective," Annals of Tourism Research, Elsevier, vol. 73(C), pages 141-158.
    3. Yoon Koh & Seoki Lee & Chris Choi, 2013. "The Income Elasticity of Demand and Firm Performance of US Restaurant Companies by Restaurant Type during Recessions," Tourism Economics, , vol. 19(4), pages 855-881, August.
    4. Marie-Louise Mangion & Chris Cooper & Isabel Cortés-Jimenez & Ramesh Durbarry, 2012. "Measuring the Effect of Subsidization on Tourism Demand and Destination Competitiveness through the AIDS Model: An Evidence-Based Approach to Tourism Policymaking," Tourism Economics, , vol. 18(6), pages 1251-1272, December.
    5. Athanasopoulos, George & Deng, Minfeng & Li, Gang & Song, Haiyan, 2014. "Modelling substitution between domestic and outbound tourism in Australia: A system-of-equations approach," Tourism Management, Elsevier, vol. 45(C), pages 159-170.
    6. Berta Ferrer-Rosell & Germà Coenders & Esther Martínez-Garcia, 2015. "Determinants in Tourist Expenditure Composition — The Role of Airline Types," Tourism Economics, , vol. 21(1), pages 9-32, February.

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