The purpose of this paper is to contribute to our understanding of the empirics of trade in tourism services by studying bilateral intra-tourism trade for a sample of 14 member states of the European Union during the period 2000–2004. The authors apply the most up-to-date and robust method available in the literature to distinguish vertically and horizontally differentiated products: the Azhar and Elliott method (2006). The results clearly show that, contrary to conventional wisdom, a large proportion of European countries simultaneously exports and imports comparable amounts of tourism services. Moreover, the predominance of vertical differentiation in these intra-tourism flows suggests that international specialization is taking place in Europe within the tourism sector itself, along the spectrum of quality.
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