Preference Shifts During Health Shocks: Foreign Tourists' Expenditure-Price Elasticity Throughout the Pandemic
Journal of Travel Research
; 2023.
Article
in English
| Web of Science | ID: covidwho-2322093
ABSTRACT
This study evaluates the changes in the expenditure-price elasticities of foreign tourists in the summer periods of 2019, 2020, and 2021. We first develop a theoretical characterization that combines microeconomic, loss aversion, price inequality and precautionary savings theories. Next, exploiting microdata for more than 34,000 foreign tourists visiting Spain, we estimate OLS and quantile regressions to empirically examine the expenditure elasticities with respect to the prices of transport services, leisure activities and bars and restaurants at the destination (17 regions). We find that (i) the expenditure-price elasticity of transportation (leisure activities) increases (decreases) during the pandemic, whereas that of bars and restaurants remains unchanged, (ii) foreign tourists are comparatively less expenditure-price elastic at high expenditure levels in transportation and bars and restaurants, and (iii) expenditure-price elasticities are highly heterogeneous depending on the origin country. Managerial and theoretical implications of the findings for firms' pricing strategies are discussed.
Full text:
Available
Collection:
Databases of international organizations
Database:
Web of Science
Type of study:
Experimental Studies
Language:
English
Journal:
Journal of Travel Research
Year:
2023
Document Type:
Article
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