Dynamic Price Response of Inbound Tourism Guest-Nights in Sweden

The paper studies monthly accommodation numbers data for visitors from five countries: the USA, FR Germany, Norway, Denmark and Finland to Sweden in the period 1978–93. The focus is on the dynamic response of guest-night numbers to changes in the relative destination price level, in the Swedish VAT-rate on tourism services, and to the Chernobyl accident and the Gulf War. The statistical estimations are made using two approaches: (1) transfer function modelling with seasonal ARIMA (SARIMAX) and (2) general-to-specific estimation of autoregressive distributive lags (ARDL) models. Step changes in the price level and tax-rate variables give rise to seasonally oscillating responses. The price-level responses seem to be mixes of own-price and cross-price effects. The results confirm earlier findings of negative Chernobyl-accident effects on incoming tourism and also indicate that negative effects from Gulf War deterrence of long-distant international travel were mitigated by increases in visits from neighbour countries.