Price sensitivity to tourism activities: looking for determinant factors (original) (raw)
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The smile of the tourist: the relationship between price sensitivity and expenses
Service Industries Journal, 2009
The objective of this study is to test the effect of individual price sensitivity on holiday expenses. In the context of tourism, in such a markedly heterogeneous market, the great diversity of sensitivities to price leads the role it plays to become especially complex. Analysis of price sensitivity allows the analyst to observe how a tourist reacts when facing different product prices and, on the other hand, understanding the determinant factors of holiday expenses is crucial for organizations and destinations to implement their strategies. The methodology applied estimates random coefficient logit models that consider tourist heterogeneity. The empirical application carried out on a sample of 2127 individuals shows that price sensitivity has a non-linear influence on holiday expenditures, drawing a curious smile-shaped effect. The differentiated effect found for price sensitivities has important implications for management, as it confirms the existence of a great diversity of price sensitivities in the market. Therefore, knowing the individual by individual preference structure in terms of prices allows the pricing of the service to each individual (though extreme, it could be possible), as well as the formation of groups of individuals with similar price preferences. This price discrimination is particularly important in that it is based on the preferences of individual people. The estimation of the individual parameters of the utility function of each individual is crucial for management as it reveals consumers’ preference structure and information on each individual is obtained. At a time when individuals are increasingly demanding and insist on service provision adapted to their specific needs, knowledge of the profile of each consumer allows organizations to offer the most suitable services.
Anomaly in Spanish tourist sensitivity to price
Literature suggests that the effect of price on destination choice can be either positive or negative and income is stated to be an important determinant of tourist decisions in such a way that tourism products behave as normal goods. Given that studies have paid little attention to the income-sensitivity to price relationship, the aim of this study is to analyze the relationship between income and tourist sensitivity to price. For this purpose, we measure and identify tourists’ sensitivities to price -individual by individual- from real choices made by tourists in order to facilitate realism, i.e., tourist sensitivity to price is estimated for each individual by observing the destination s/he actually selects. The empirical application is carried out on a sample of 2,127 individuals, and the operative formalization used to estimate individual sensitivities to price follows a Random-Coefficient Logit Model; and to detect the way they relate to income, a regression analysis is employed. The results show an anomalous relationship: income levels moderate tourist sensitivity to price in such a way that increases in the first levels of income reduce the negative effect of price (as expected), but there is a “saturation point”, i.e. after a threshold, tourist sensitivity to price increases again (the negative effect of price reappears) – against expectations for these high-incomers-.
Finding similar price preferences on tourism activities
2011
This article builds on the double role of the effect of prices on the choice of tourism activities: not only is it the only component of a destination marketing strategy that represents income but also a determinant factor in tourist choice. On this account, identifying patterns of tourists with different degrees of sensitivities to prices would help them design an appropriate bundle of activities and have a clear definition of the segment the destination should try to attract.
Journal of Travel Research, 2012
This article builds on the double role of the effect of prices on the choice of tourism activities: not only is it the sole component of the destination marketing mix that represents revenue but also a determinant factor in tourist choice. On this account, identifying patterns of tourists with different degrees of sensitivities to prices would help destinations design an appropriate bundle of activities and have a clear definition of the segment they should try to attract. Accordingly, the objective of this article is to identify tourist segments from individual price sensitivities to activities. The results show—although price has a dissuasive influence on the choice of activities—a differentiated effect (as this dissuasiveness is not general for all individuals); this heterogeneous responsiveness to price supports its use as a segmentation criterion. In the empirical application, four segments are found with significantly different price sensitivities.
Culture-sensitive tourists are more price insensitive
Journal of Cultural Economics, 2010
The purpose of this article is to analyze the effect of the cultural interest manifested by tourists when planning a vacation on their sensitivity to price. The proposed hypothesis states that tourist price sensitivity is moderated, at the moment of choosing a destination, by cultural interest. For this purpose, we measure and identify tourists’ price sensitivities—individual by individual—from real choices, i.e., tourist price sensitivity is estimated for each individual by observing the destination she actually selects. The empirical application is carried out on a sample of 2,127 individuals, and the operative formalization used to estimate individual price sensitivities follows a Random-Coefficient Logit Model; and to detect the way these sensitivities relate to the search for culture, an ANOVA procedure is employed. The results show an incremental effect of cultural interest on tourist price insensitivity; i.e., people looking for culture find their price sensitivity moderated by this interest in such a way that the negative effect of price diminishes. Also, we further explore these culture-interested tourists by a segmentation analysis, identifying five segments with different price sensitivities—one of them even showing certain high-price proneness.
Tourism Management, 2006
The literature of tourist destination choice pays great attention to the direct impact of the attributes of ''distance to the destination'' and ''prices of the destination'', but does not reach any consensus around them regarding their-inhibitory or attraction-effect. Alternatively, our study proposes that the effects of distance and prices are moderated by tourist motivations at the moment of choosing a destination, which leads us to make hypotheses to explain this decision through the interaction between destination attributes and the personal motivations of the individual tourists. The methodology applied estimates random coefficient logit models, which control possible correlations between different destinations and consider tourist heterogeneity. The empirical application carried out in Spain on a sample of 2127 individuals, shows that the dissuasive influence of distance and prices on the selection of destinations is moderated by motivations, in the sense that the motivations have a direct (increasing the dissuasive effect) or inverse (reducing the dissuasive effect) moderating effect on the influences of distance and prices. r
Consumer Behavior in the Different Sectors of Tourism
2010
Consumer behavior is a fascinating but difficult subject to research. This statement is particularly relevant in the tourism field, where the decision to purchase by a consumer is of emotional significance. The consumption of tourism products is dependent on discretionary time and income. Thus, much attention has been devoted to determining motives for travel behavior, both in terms of choosing
Willingness to Pay for Premium Tourism Services
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This study aims at investigating the antecedents of willingness to pay for premium price in tourism context. The object of the study is Labuan Bajo, a well-known tourist destination in Indonesia which is targeted as a premium class destination by the government. Data were collected through a self-administered survey and analysed with quantitative approach. Findings reveal that willingness to pay premium is influenced by interdependent trait indirectly through ecotourism attitude. This result discloses the role of personality differences in affecting willingness to pay premium tourism. Theoretical and practical contributions of the present study were discussed. Keywords—willingness to pay premium, ecotourism attitude, environment belief, interdependent
2013
From a managerial perspective, it is critically important to understand consumer perceptions of each of the attributes associated with the price: characteristics that a customer is willing to make an extra payment for and those which are irrelevant in the determination of consumer choices and preferences. Hedonic price analysis (HPA) makes it easier to discern which characteristics are valued by consumers and to what extent. In addition, HPA is also able to put a price estimate onto non–market product or service characteristics. For example, found that proximity to river streams had a significant influence on willingness to pay (i.e., respondents valued the proximity to river streams equal to $13.81 per foot). Hence, this technique is particularly useful for managerial decision making and evaluating individual preferences. in this chapter, we will explain the theory of HPA, followed by an illustration of its application in tourism research, and concluded by a discussion of managerial implications.
Zbornik radova - Geografski fakultet Univerziteta u Beogradu, 2018
Practice has shown that prices, an important economic factor, have a signifi cant effect on the choice of tourist destination, i.e. they have a direct impact on the tourism demand and add to its elasticity. More often than not, the connection between the "prices in the hospitality industry and tourism demand dynamics" is not a simple one. Many various factors besides prices in the hospitality industry infl uence the decision on a tourism trip, rendering this connection very complex. The effect of prices on domestic tourism demand is particularly evident in developing countries with low avarage salaries. To be better able to objectively perceive the effect of price growth in the hospitality industry, in addition to the basic parameters (prices in hospitality services, domestic arrivals and overnight stays of domestic tourists), we also analysed the cost of life, average salaries and changes in the euro exhange rate. All the parameters are for Serbia and they cover a period of fi fteen years, 2002-2016. The principal method used in the research is the statistical method of linear correlation analysis, where the linear correlation coeffi cient was taken as an indicator.