The short-term price effect of a tourist tax through a dynamic demand model: The case of the Balearic Islands

Abstract Tourist taxes have become an important source of revenue for many tourist destinations. Taxes on accommodation are upheld by their proponents as a way of shifting the local tax burden on to non-residents, while the travel industry claims that these levies do significant damage to their level of competitiveness. The objective of this paper is to identify the market's sensitivity to price changes in travel-related services or groups of services, assuming that one of the main factors that influences travel decisions is the information on the destination that consumers receive. In order to include this effect, the study applies a combination of a diffusion model and a traditional economic utility theory model to tourists visiting the Balearic Islands (Spain) from the United Kingdom, Germany, France and the Netherlands.

[1]  S. Hiemstra,et al.  Incidence of the Impacts of Room Taxes on the Lodging Industry , 1993 .

[2]  C. Witt,et al.  Forecasting tourism demand: A review of empirical research , 1995 .

[3]  J. Mak,et al.  THE EXPORTABILITY OF HOTEL OCCUPANCY AND OTHER TOURIST TAXES , 1985, National Tax Journal.

[4]  M. Thea Sinclair,et al.  The Economics of Tourism , 1991 .

[5]  Clive Morley,et al.  A dynamic international demand model , 1998 .

[6]  Teodosio Pérez Amaral,et al.  An econometric model for international tourism flows to Spain , 2000 .

[7]  J. Artus.  An Econometric Analysis of International Travel , 1972 .

[8]  S. Wanhill.  VAT Rates and the UK Tourism and Leisure Industry , 1995 .

[9]  A. Zellner.  An Efficient Method of Estimating Seemingly Unrelated Regressions and Tests for Aggregation Bias , 1962 .

[10]  Stephen F. Witt,et al.  Tourism demand forecasting models: Choice of appropriate variable to represent tourists' cost of living , 1987 .

[11]  Maxwell L. King,et al.  Forecasting international quarterly tourist flows using error-correction and time-series models , 1997 .

[12]  F. Bass.  A new product growth model for consumer durables , 1976 .

[13]  Costas Siriopoulos,et al.  The Demand for Tourism to Greece: A Cointegration Approach , 1998 .

[14]  Frank M. Bass,et al.  A New Product Growth for Model Consumer Durables , 2004, Manag. Sci..

[15]  Carl S. Bonham,et al.  THE IMPACT OF THE HOTEL ROOM TAX: AN INTERRUPTED TIME SERIES APPROACH , 1992, National Tax Journal.

[16]  C. Lim,et al.  An Econometric Classification and Review of International Tourism Demand Models , 1997 .

[17]  Demand Modelling Methodologies: Integration and other Issues , 2000 .

[18]  Paz Moral,et al.  Analysis of tourism trends in Spain. , 1996 .

[19]  Clive Morley,et al.  A microeconomic theory of international tourism demand , 1992 .

[20]  W. Stronge,et al.  U.S. tourism in Mexico: An empirical analysis , 1982 .

[21]  Geoffrey I. Crouch,et al.  The Study of International Tourism Demand: A Survey of Practice , 1994 .

[22]  K. Greenidge,et al.  Forecasting tourism demand: An STM approach , 2001 .

[23]  Stephen F. Witt,et al.  Cointegration versus least squares regression , 2001 .

[24]  Tae Hoon Oum.  ALTERNATIVE DEMAND MODELS AND THEIR ELASTICITY ESTIMATES , 1989 .

[25]  Haiyan Song,et al.  An empirical study of outbound tourism demand in the UK , 2000 .

[26]  A. Athiyaman.  Knowledge development in tourism: tourism demand research , 1997 .

[27]  G. Crouch.  Demand elasticities in international marketing : A meta-analytical application to tourism , 1996 .

[28]  J. Mak,et al.  The Economics of a Hotel Room Tax , 1979 .

[29]  S. Hiemstra,et al.  Analysis of Room Taxes Levied on the Lodging Industry , 1992 .

[30]  Byron Gangnes,et al.  Intervention analysis with cointegrated time series: the case of the Hawaii hotel room tax. , 1996 .

[31]  M. Sakai.  A micro-analysis of business travel demand , 1988 .