Why Can Package Tours Hurt Tourists? Evidence from China’s Tourism Demand in Hong Kong

Abstract

The package tour market is information intensive in nature. Its complex informational structure is generally inaccessible to tourists, whose purchase behavior might be affected by the extent to which they can access such information. This study shows that package tours can result in low tourist satisfaction and deter tourists’ behavioral intention over time despite the fact that package tours are financially advantageous. An analysis of data based on China’s outbound tourism demand in Hong Kong from 1993 to 2013 shows that tourist satisfaction can be explained by the market share of inclusive package tours. This suggests that the decline in the market share of package tours leads to an increase in tourist satisfaction. As the amount of information in the market increases as a result of accumulated travel experience, package tours are replaced by independent tours or entirely new packages, or by travel to a new destination.