Modeling uncertainty in tourism markets

Identifier:  imarina:9374775

Handle: https://hdl.handle.net/20.500.11797/imarina9374775

Authors:  Duro, Juan Antonio; Osorio, Antonio; Perez-Laborda, Alejandro

Abstract:
In the recent years the tourism sector has been hit by a number of uncertainty events. This paper studies how uncertainty impacts on the tourism markets and on the destinations price and promotion decisions. We consider a two -stage model with two reference destinations and product differentiation. Speci fically, we distinguish between traveling and production costs/inputs uncertainty, and between informative and persuasive advertising. We found that uncertainty tends to increase prices as destinations pass uncertainty to consumers. However, in order to minimize the negative effect of higher prices in their bookings, destinations tend to intensify their promotion efforts. Altogether, uncertainty typically affects more consumers than destinations, which in most cases see their pro fits increase because of the increase in prices. (c) 2024 The Author(s). Published by Elsevier Ltd. This is an open access article under the CC BY -NC license (http://creativecommons.org/licenses/by-nc/4.0/).