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How important are prices in long-haul travel? Evidence from New Zealand

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  • Puneet Vatsa
  • Faruk Balli

Abstract

Tourism demand theory postulates that tourists’ incomes, prices in destination countries, and prices in tourists’ countries of origin are key determinants of tourism demand—but must this hold for long-haul travel? We find the answer to be no. By analyzing three international tourist archetypes arriving in New Zealand, a remote island nation, from seven countries, we demonstrate that neither incomes nor prices affect tourism demand in the short run. In the long run, some evidence suggests that tourism demand is income-sensitive; however, it remains insensitive to price changes. We also show that estimates of price elasticities are sensitive to how models are specified and should be interpreted cautiously. The results of this study are broadly relevant to long-haul destinations worldwide.

Suggested Citation

  • Puneet Vatsa & Faruk Balli, 2024. "How important are prices in long-haul travel? Evidence from New Zealand," Tourism Economics, , vol. 30(6), pages 1492-1507, September.
    • Handle: RePEc:sae:toueco:v:30:y:2024:i:6:p:1492-1507
    DOI: 10.1177/13548166231215382
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