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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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    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. 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.
    10. 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.
    11. Dragouni, Mina & Filis, George & Gavriilidis, Konstantinos & Santamaria, Daniel, 2016. "Sentiment, mood and outbound tourism demand," Annals of Tourism Research, Elsevier, vol. 60(C), pages 80-96.
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    13. 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.
    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.
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    17. 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.
    18. 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).
    19. Silva, Emmanuel Sirimal & Ghodsi, Zara & Ghodsi, Mansi & Heravi, Saeed & Hassani, Hossein, 2017. "Cross country relations in European tourist arrivals," Annals of Tourism Research, Elsevier, vol. 63(C), pages 151-168.
    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. 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.
    22. Silvia Emili & Paolo Figini & Andrea Guizzardi, 2020. "Modelling international monthly tourism demand at the micro destination level with climate indicators and web-traffic data," Tourism Economics, , vol. 26(7), pages 1129-1151, November.
    23. 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.

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