ECCB Working Paper - What is Driving Toursim Flows to the ECCU

positive determinants of tourism demand, while prices and distance negatively impact demand. The

latter suggests that only limited resources should be expended on distant source markets. Gravity

dummies like common language and colonial history were also positive. In addition, the authors

introduced a marketing dummy that was also found to impact tourist arrivals positively.

Finally, the authors believe that further research into the area should include two things. Firstly, to

capture relative prices among competitors it would be useful to assess average accommodations or

travel package prices. This could serve as an improvement on the traditional CPI based proxy for

relative prices, which includes a wide basket of goods that may not be relevant to travel or tourists’

spending decisions. Tourists usually compare packages and accommodation prices before a final

travel decision is made. Secondly, if detailed promotion expenditure data becomes available one could

estimate the marketing elasticity of demand for the ECCU. This could help policy makers better align

marketing budget allocations and quantify the return on marketing expenditure.

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