Price sensitivity to tourism activities: Looking for determinant factors

The literature contains evidence that there is a marked heterogeneity in price responses to tourism products, leading to a great variety of tourist sensitivities to price. Thus the role price plays is complex, and a particularly challenging aspect of this complexity is that its effect is not unambiguous, thereby negating the idea that the demand for tourism products and tourist activities can always be regarded as demand for ordinary goods. This article identifies and explains, as a novelty for the tourism industry, price sensitivities to tourism activities individual by individual. The operative formalization uses a mixed logit model to estimate the individual sensitivities to price, and then a regression analysis is applied to detect their determinants. The empirical application finds that motivations, influenced by age, and length of stay with a non-linear effect, are explanatory factors of tourists' price sensitivity to activities.