The Evolution of British Package Holiday Prices in the Balearic Islands, 2000-2008

Abstract

[eng] This paper analyses the evolution of package holiday prices in the</p><p>Balearics marketed by a sample of British tour operators during</p><p>2000–2008. Three alternative price indexes are presented to measure</p><p>the evolution of the package holiday prices: a fixed-base hedonic,</p><p>chained hedonic and chained Laspeyres price index. The results</p><p>demonstrated that the fixed-base hedonic price index underwent a</p><p>very slight increase during the period, while the chained hedonic</p><p>price index and chained Laspeyres price index decreased in value. A</p><p>comparison of these indexes with two competitiveness indicators (the</p><p>British Consumer Price Index and the British Package Holidays Price</p><p>Index) shows that the price of package holidays in the Balearic</p><p>Islands dropped in value in relation to both the British cost of living</p><p>index and the general package holiday price index for Britons. An</p><p>elementary tourism demand function was also estimated, using the</p><p>constructed indexes, suggesting that British demand was not very</p><p>sensitive to the price of the Balearic package holiday.</p>