Measuring price elasticities of demand for outbound tourism using competitiveness indices

Neelu Seetaram, Peter Forsyth, Larry Dwyer

Research output: Contribution to journalArticle

24 Citations (Scopus)

Abstract

The real exchange rate (REX) has long been used as the proxy for prices in tourism demand models. However it has limitations, particularly when it comes to models of outbound tourism. As an alternative, a price competitiveness index (PCI) is developed and used as a proxy for prices in a model of outbound tourism from Australia. Results obtained show that while REX is statistically insignificant and yields a price elasticity of -0.002, PCI is significant and generates a price elasticity of -1.07. The results obtained show that PCI outperforms REX as the preferred price variable in modelling outbound demand on both theoretic and empirical grounds. Furthermore, this index can be used to monitor the inter-temporal competitiveness of a destination.

LanguageEnglish
Pages65-79
Number of pages15
JournalAnnals of Tourism Research
Volume56
Early online date7 Dec 2015
DOIs
Publication statusPublished - 1 Jan 2016
Externally publishedYes

Fingerprint

price elasticity
competitiveness
elasticity
tourism
Tourism
demand
real exchange rate
price
index
measuring
Competitiveness
Price elasticity of demand
Real exchange rate

Cite this

@article{66c9be1c33994e418b1dbc7439ba6f63,
title = "Measuring price elasticities of demand for outbound tourism using competitiveness indices",
abstract = "The real exchange rate (REX) has long been used as the proxy for prices in tourism demand models. However it has limitations, particularly when it comes to models of outbound tourism. As an alternative, a price competitiveness index (PCI) is developed and used as a proxy for prices in a model of outbound tourism from Australia. Results obtained show that while REX is statistically insignificant and yields a price elasticity of -0.002, PCI is significant and generates a price elasticity of -1.07. The results obtained show that PCI outperforms REX as the preferred price variable in modelling outbound demand on both theoretic and empirical grounds. Furthermore, this index can be used to monitor the inter-temporal competitiveness of a destination.",
keywords = "Australia, Dynamic panel data, Outbound tourism, Price competitiveness index, Price elasticity",
author = "Neelu Seetaram and Peter Forsyth and Larry Dwyer",
year = "2016",
month = "1",
day = "1",
doi = "10.1016/j.annals.2015.10.004",
language = "English",
volume = "56",
pages = "65--79",
journal = "Annals of Tourism Research",
issn = "0160-7383",
publisher = "Elsevier Limited",

}

Measuring price elasticities of demand for outbound tourism using competitiveness indices. / Seetaram, Neelu; Forsyth, Peter; Dwyer, Larry.

In: Annals of Tourism Research, Vol. 56, 01.01.2016, p. 65-79.

Research output: Contribution to journalArticle

TY - JOUR

T1 - Measuring price elasticities of demand for outbound tourism using competitiveness indices

AU - Seetaram, Neelu

AU - Forsyth, Peter

AU - Dwyer, Larry

PY - 2016/1/1

Y1 - 2016/1/1

N2 - The real exchange rate (REX) has long been used as the proxy for prices in tourism demand models. However it has limitations, particularly when it comes to models of outbound tourism. As an alternative, a price competitiveness index (PCI) is developed and used as a proxy for prices in a model of outbound tourism from Australia. Results obtained show that while REX is statistically insignificant and yields a price elasticity of -0.002, PCI is significant and generates a price elasticity of -1.07. The results obtained show that PCI outperforms REX as the preferred price variable in modelling outbound demand on both theoretic and empirical grounds. Furthermore, this index can be used to monitor the inter-temporal competitiveness of a destination.

AB - The real exchange rate (REX) has long been used as the proxy for prices in tourism demand models. However it has limitations, particularly when it comes to models of outbound tourism. As an alternative, a price competitiveness index (PCI) is developed and used as a proxy for prices in a model of outbound tourism from Australia. Results obtained show that while REX is statistically insignificant and yields a price elasticity of -0.002, PCI is significant and generates a price elasticity of -1.07. The results obtained show that PCI outperforms REX as the preferred price variable in modelling outbound demand on both theoretic and empirical grounds. Furthermore, this index can be used to monitor the inter-temporal competitiveness of a destination.

KW - Australia

KW - Dynamic panel data

KW - Outbound tourism

KW - Price competitiveness index

KW - Price elasticity

UR - http://www.scopus.com/inward/record.url?scp=84949309815&partnerID=8YFLogxK

U2 - 10.1016/j.annals.2015.10.004

DO - 10.1016/j.annals.2015.10.004

M3 - Article

VL - 56

SP - 65

EP - 79

JO - Annals of Tourism Research

T2 - Annals of Tourism Research

JF - Annals of Tourism Research

SN - 0160-7383

ER -