Effects of ski lift ticket discounts on local tourism demand

Abstract

Purpose The purpose of this paper is to provide a first evaluation of the effectiveness of the early bird discount on ski lift tickets by estimating the impact on hotel overnight stays of the Saas-Fee destination. Design/methodology/approach The difference-in-differences (DID) approach is used to compare winter sport destinations with and without the price reduction before and after the introduction of the price discount. The sample is composed of the 54 largest Swiss winter sport destinations for the seasons 2013/2014 and 2016/2017. Findings DID estimations show an increase in overnight stays of Swiss residents by 50 per cent as compared to the control group. Quantile regression estimations for the conditional upper part of the overnight stays distribution reveal a lower average treatment effect of 38 per cent. However, DID estimates for total overnight stays (domestic and foreign) are much smaller – about 17 per cent – indicating that the price reductions are not effective in attracting foreign visitors. Results are not sensitive when taking into account a large number of control variables (elevation, size and snow making capacity). Research limitations/implications As tourists visiting winter sport destinations are interested in a mix of activities, lift ticket revenues or number of skier days should be used as an alternative outcome measure. Practical implications As positive effects on local tourism demand are mainly limited to Swiss tourists, such price strategies should be carefully considered. In the long term, the skiing market will stagnate or even shrink for several reasons (population ageing, climate change and changes in leisure preferences). Originality value This paper provides a first quantitative evaluation of price discounts in tourism research. Knowledge about the discounts and consumers reactions to sales promotions are of great interest to marketing managers in today’s competitive ski market.