Discretionary Expenditure and Tourism Consumption: Insights from a Choice Experiment

Abstract

Consumers’ decisions to spend money on tourism occur in the context of the other potential uses of their resources and corresponding values or utilities. Although many studies have examined the demand for travel and tourism, there is no known study that reveals how individuals and households make trade-offs when allocating their spending among various potential categories of discretionary expenditure. This study assesses these trade-offs empirically through the conduct of a choice experiment on a random sample of Australian consumers. The results provide insight into how each category of discretionary expenditure is valued and how spending in each category competes for a share of the discretionary expenditure “pie.” We discuss the results with an emphasis on the implications for tourism.