In an interesting presentation he explained that Hong Kong is a prime tourism destination is Asia, but it is facing increasing competition from places like Macau, Singapore and Seoul. His analysis involved the estimation of an error-correction long term Almost Ideal Demand System to link price competitiveness to the expenditure of tourists from different source markets. Demand elasticities capture how prices influence the allocation of their travel budget.
The implications of the work include that:
- It is important for Hong Kong to maintain low and stable inflation.
- Hong Kong should not engage in price wars with Macau.
- The competition with Singapore is in terms of human resources and environmental sustainability.
- The key is to improve service and tourist satisfaction to decrease their price sensitivity.
If this sounds interesting, you can have a look at the full paper published in Tourism Management. Follow the Uni Surrey link here.