A model of allocation of tourist expenditures was estimated to examine the economic
parameters underlying the demand for Australian tourism goods and services by foreign tourists.
The model was applied to major and minor source
s of tourists to Australia. The elasticities
derived from the two models show broad similarities, elasticities of demand for food are similar
in magnitudes; expenditure elastic
ities are greater than unity and pr
ice elasticities are closer to
unity. Similarly, the magnitudes of elasticities in relation to two other key components of
tourists’ consumption, accommodation and transpor
tation, are also broadly similar. Elasticities
of demand for the three major consumption item
s, food, accommodation, and transportation are
price and expenditure inelastic implying that
the three commodities are
necessities from the
tourists’ point of view. The same consistency, however, is not evident in the elasticity
parameters in relation to the commodity groups
shopping and entertainment. These variations
may reflect the differences in preferences of tourists from various sources.