Explaining price heterogeneity through leisure participation

Abstract

The purpose of this article is to analyze the effect of distinct participation frequencies of leisure activities at and away from home on the consumer price sensitivity. The idea is that the individual price sensitivity is influenced, at the moment of choosing a destination, by the motivation that drives people to search for destinations that allow them to do specific leisure activities; these motivations condition the influence of the residual culture (through which people exhibit at destination a similar behavior to their home environment) and tourist culture (by which at the destination they change the patterns of activities they get involved in at their place of origin). For this purpose, we measure and identify individual price sensitivities – individual by individual –. The empirical application is carried out on a sample of 2,127 individuals, and the operative formalization used to estimate individual sensitivities to price follows a Random-Coefficient Logit Model; and to detect the way these sensitivities relate to the different participation frequencies in leisure activities, a regression procedure is employed. The results show that the residual and tourist cultures have an influence on price sensitivity, in such a way that different price sensitivities exist per participation-frequency scenario and per type of leisure activity.