Compositional tourists’ expenditure: Modeling through Dirichlet regression

Abstract

This study models the relative expenditure of tourists in terms of budget allocation according to their dependence on a group of covariates. A model that captures how tourist distributes its budget among the diverse items is introduced to characterize and compare different types of tourists according to their relative expenditure patterns. For the empirical exercise, data for the period 2014–2019 collected by the Ministry of Tourism from the Inbound Tourism survey in Uruguay is analyzed by means of the compositional data analysis and modeled by a Dirichlet regression. The empirical results show that the expending pattern in accommodation, food, and others items depend on the destination, the season, the nationality, and the type of accommodation. In addition, the inferential analysis reveals different typologies of tourist, providing a novel interpretation of the tourist behavior from the microeconomic perspective. JEL ClassificationL83, Z30, C14.