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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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    11. 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.
    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. 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.
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    18. Muhammad Shafiullah & Luke Emeka Okafor & Usman Khalid, 2019. "Determinants of international tourism demand: Evidence from Australian states and territories," Tourism Economics, , vol. 25(2), pages 274-296, March.
    19. 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.
    20. 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.
    21. 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.
    22. 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.
    23. Alderighi, Marco & Gaggero, Alberto A., 2019. "Flight availability and international tourism flows," Annals of Tourism Research, Elsevier, vol. 79(C).

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