Abstract
This study uses the United Kingdom Family Expenditure Survey data to investigate the effect of incomes on hotel and holiday expenditures. The results confirm the general understanding in tourism studies that such expenditure is income elastic. Additionally, the study suggests that the elasticity varies considerably between income groups, with very high income elasticities for low income groups and lower, but still elastic, responsiveness by high income groups. This suggests that spending on hotels and holidays is a long way from saturation point, and people with low incomes may increase their consumption considerably as income levels rise. However, firm estimation of the relationships requires a more detailed investigation.
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