The recent expansion of low-cost carriers and the increasing use of the Internet are bringing about a major transformation in the marketing of summer tourism products in Europe. This paper investigates differences in price levels and price dispersion across offline and online markets and across tour operators and new emerging Internet retailers, using microdata for individual tourist expenditure on travel and accommodation in the Balearic Islands, Spain. The results of the hedonic regression model suggest that the prices of transport, accommodation and board offered on the Internet are lower than those offered through other channels, whatever the quality and quantity.
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