This study analyses the consumption behaviour of international tourists from Australia’s four major
source markets: New Zealand, UK, USA and Japan. A preliminary analysis of their consumption expenditures
reveals intriguing similarities as well as diversities in consumption patterns. These are sought to
understand in terms of the utility-maximising framework in which observed differences in prices and
incomes play a key role. Based on the neoclassical economic theory of consumer behaviour, models
incorporating five major components of tourist consumption – Accommodation, Food, Transport,
Shopping and Entertainment- are estimated. Overall, the level of tourist consumption is found to be
highly sensitive to incomes but less sensitive to prices. The low price sensitivity suggests tourists
perceive the commodities as necessities and may also reflect their captivity at the destination, masking
the underlying true price sensitivities. An important dimension underlying these findings is the possible
lack of information about the destination leading to sub-optimal consumption choices.