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Expenditure-based segmentation of tourists taking into account unobserved heterogeneity: The case of Venice

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  • Reza Mortazavi

    (Dalarna University, Sweden)

  • Magdalena Lundberg

    (Dalarna University, Sweden)

Abstract

Visitors to big tourist cities are very likely heterogeneous and can be classified into different segments, for example, low and high spenders. Previous studies on visitor expenditure-based segmentation seem to have only taken into account observed heterogeneity, usually segmenting tourists based on observed characteristics. In the present study, however, the visitors to Venice, Italy, are segmented with respect to their spending into different groups based on both observed and unobserved heterogeneity using a finite mixture model. The results indicate that the visitors belong to three latent classes with respect to their expenditure. Interestingly, different variables affect expenditure differently depending on the latent class belonging. The overall conclusion is that segmenting tourists into different classes based on unobserved heterogeneity with respect to their spending is preferable and more informative than treating the visitors as one homogeneous group. The approach is also more useful for different types of policymaking.

Suggested Citation

  • Reza Mortazavi & Magdalena Lundberg, 2020. "Expenditure-based segmentation of tourists taking into account unobserved heterogeneity: The case of Venice," Tourism Economics, , vol. 26(3), pages 475-499, May.
  • Handle: RePEc:sae:toueco:v:26:y:2020:i:3:p:475-499
    DOI: 10.1177/1354816619841713
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    References listed on IDEAS

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    2. Beata Gavurova & Jaroslav Belas & Katarina Zvarikova & Martin Rigelsky & Viera Ivankova, 2021. "The Effect of Education and R&D on Tourism Spending in OECD Countries: An Empirical Study," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 23(58), pages 806-806, August.

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