Price Elasticities in International Tourism

Abstract

Economic theory holds a central place for price as a determinant of demand. In international tourism, a large number of empirical studies have attempted to estimate the role of price in the form of price elasticities. So far, however, there seems to be little consensus across these studies because the results have been found to vary considerably. This study investigates in depth the findings of these studies. The evidence suggests an average price elasticity of demand for international tourism around -0.6 to -0.8, the magnitude depending on a number of methodological and substantive factors. Tourist destinations need to continue to manage costs and tackle, as well, the whole issue of efficiency and productivity of local tourist services.