An analysis of elasticity of tourism demand: How changes in price, hotel cost, and income affect tourism demand for the Bahamas

Researchers have used many different socio-economic variables to explain tourism demand as measured by the annual number of tourists and their lengths of stay, but researchers generally agree that price and income are the two most dominant predictors for tourism demand (Hiemstra, 1991; Loeb 1982; Poole, 1988; and Uysal 1983). Therefore, it is incumbent upon tourism planners and local governments to understand how tourism demand changes in response to changes in price and income.;The study reported here focused on (1) price elasticity of demand for tourists' length of stay, (2) hotel cost elasticity of demand for independent tourists' length of stay, (3) price and income elasticity of demand for the annual number of tourists to the Bahamas, and (4) cross-price elasticity of demand for the annual number of tourists to the Bahamas.;The airport exit survey of the Bahamas Ministry of Tourism, and data from the Travel Industry World Year Book were used this study. The results suggest that the price elasticity of tourists' length of stay is not price sensitive. The length of stay of package tourists and low season tourists was, however, sensitive to price. Additionally, independent tourists' length of stay was elastic with hotel cost.;The demand for the annual number of visitors in the Bahamas is income elastic, and the cross-price elasticity indicated that the Bahamas has a substitute relationship with the Barbados and Jamaica, since the cross-price elasticity of demand were positive values.