Destination Price Competitiveness: Exchange Rate Changes versus Domestic Inflation

Abstract

The price competitiveness of tourism is an important determinant of inbound visitor numbers. Price competitiveness indices can be used to explore questions of how a destination changes in this respect over time and the causes of any changes. A method of constructing tourism price competitiveness indices is outlined here. The method allows the various determinants of tourism price competitiveness, such as exchange rate and price changes, to be highlighted and their influence on the indices to be identified. The method also allows for comparison of a destination’s tourism price competitiveness relative to domestic tourism in origin markets and for its overall price competitiveness relative to major competitors. Results are presented for 19 tourism destinations during the period from 1985 to 1998 using Australia as a base case.

Get full access to this article

View all access options for this article.

References

Adams, P. D. , and B. R. Parmenter (1991). The Medium Term Significance of International Tourism to the Australian Economy. Canberra, Australia: Bureau of Tourism Research.

Bureau of Tourism Research (1998). International Visitor Survey. Canberra, Australia: Bureau of Tourism Research.

Crouch, G. , and J. R. Brent Ritchie (1999). “Competitive Tourism Destinations: Combining Theories of Comparative Advantage.” Unpublished working paper, Ninth Australian Tourism and Hospitality Research Conference, February, in Adelaide, Australia.

Crouch, G. , and J. R. Brent Ritchie (2000). “The Competitive Destination: A Sustainability Perspective.” Tourism Management, 21 (1): 1-8.

Dwyer, L. , P. Forsyth , and P. Rao (1999). “Tourism Price Competitiveness and Journey Purpose.” Turizam, 47 (4): 283-299.

Dwyer, L. , P. Forsyth , and P. Rao (2000). “The Price Competitiveness of Travel and Tourism: A Comparison of 19 Destinations.” Tourism Management, 21 (1): 9-22.

Dwyer, L. , P. Forsyth , P. Rao , and P. Valerio (1998). Australia: A Price Competitive Tourist Destination? Sydney: Tourism Council of Australia. (Prepared for Tourism Council of Australia by Centre for Tourism and Hospitality Research and Centre for Efficiency and Productivity in association with Arthur Andersen)

Pannell-Kerr Forster (1996). Eurocity Survey Reports. New York: Pannell-Kerr Forster.

Pannell-Kerr Forster (1997). Trends in Hotel Industry (Asia Pacific Region). New York: Pannell-Kerr Forster.

10.

Summers, R. , and A. Heston (1991). “The Penn World Table (Mark 5): An Expanded Set of International Comparisons, 1950-1987.” Quarterly Journal of Economics, 87: 1-41.

11.

Tourism Forecasting Council (1998). Inbound Tourism Short Term Scenarios (Special Rep.). Canberra, Australia: Tourism Forecasting Council.

12.

Tourism Forecasting Council (2000). Forecast: The Tenth Report of the Tourism Forecasting Council. Canberra, Australia: Tourism Forecasting Council.

13.

World Bank (1993). Purchasing Power of Currencies: Comparing National Incomes Using ICP Data. Washington, DC: International Economics Department, World Bank.

14.

World Bank (1998). Development Report. Washington, DC: World Bank.