How important are prices in long-haul travel? Evidence from New Zealand

Puneet Vatsa and Faruk Balli

Tourism Economics, 2024, vol. 30, issue 6, 1492-1507

Abstract: Tourism demand theory postulates that tourists’ incomes, prices in destination countries, and prices in tourists’ countries of origin are key determinants of tourism demand—but must this hold for long-haul travel? We find the answer to be no. By analyzing three international tourist archetypes arriving in New Zealand, a remote island nation, from seven countries, we demonstrate that neither incomes nor prices affect tourism demand in the short run. In the long run, some evidence suggests that tourism demand is income-sensitive; however, it remains insensitive to price changes. We also show that estimates of price elasticities are sensitive to how models are specified and should be interpreted cautiously. The results of this study are broadly relevant to long-haul destinations worldwide.

Keywords: Income elasticity; price elasticity; tourism demand; New Zealand; ARDL (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:sae:toueco:v:30:y:2024:i:6:p:1492-1507

DOI: 10.1177/13548166231215382

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