Destination Management and Tourists' Choice with a Two-Part Tariff Price of the Holiday

Abstract

The holiday can be considered a good for which the tourist pays a two-part tariff (TPT). The variable part, roughly proportional to the length of stay, is charged on top of a fixed price, paid to get to the destination (typically due to travel costs). We analyse the policy implications of this price structure in both monopoly and monopolistic competition, by arguing that the TPT might be used as a policy instrument to drive the tourist towards certain destination targets in terms of arrivals and length of stay, thus possibly contrasting the present trend in the reduction of holidays’ length.

Keywords: Two-part tariff; pricing strategy, tourism economics, tourism destination

JEL Classification: L1, L83, R3, R5