Tourists’ Willingness to Pay for Holiday Trip Characteristics: A Discrete Choice Experiment

Abstract

This paper studies the marginal rates of substitution and Willingness to Pay for holiday trip characteristics. By means of a Discrete Choice Experiment, we specifically examine how much individuals from four cities in Northern Spain are willing to pay for accommodation, mode of transport, travel time and length of stay. We estimate a Latent Class Model that allows us to account for taste heterogeneity based on sociodemographic characteristics. The welfare loss due to a tourism daily tax is also examined. Our results show that respondents place positive utility to travelling by plane, high-quality accommodation and longer stays. Specifically, they are willing to pay about €170 more for plane travelling with respect to the use of car, €120 for staying at a 4-star hotel relative to an apartment, and €760 for a 10-day trip relative to a 3-day one. We show that a daily tax of €1 per person would produce a larger welfare loss in coastal destinations.