Tourism Competitiveness: Price and Quality

Abstract

The price competitiveness of tourism destinations is examined at the national level using the Almost Ideal Demand System model. The extent to which changes in the characteristics of package holidays in destinations contribute to a change in the price of the packages is then examined using hedonic pricing models. The results show that the price sensitivities of tourism demand vary considerably between destinations, so that monitoring relative price competitiveness is important. The characteristics that have significant effects on package prices are identified, assisting policy makers in their choice of which characteristics to enhance with a view to increasing the returns from tourism.