Slutsky equation in tourism: an empirical study in Vietnam

ABSTRACT

The purpose of the paper is to apply the Slutsky equation to the Bass diffusion model to examine the price and income elasticities of hotel demand in different tourist destinations including cultural, commercial, and coastal cities. The sample was a set of 120 points by ex-post data from the Smith Travel Research in Vietnam. Findings indicate the price in a leisure destination in the beginning of the tourist area life cycle is inelastic, whereas the prices in the business and culture destinations at the end of the cycle are elastic. This study identifies the hidden cost when demand increases in the three destinations, ultimately allowing hoteliers to effectively strategize when making price changes within their industry.

KEYWORDS:

• Slutsky equation
• Bass model
• tourist destinations
• Vietnam

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Notes on contributors

Minh Cong Nguyen

Minh C Nguyen is the faculty member of Hospitality and Tourism Institute at Duy Tan University, Da Nang, Vietnam. His research interests include food tourism, medical tourism, marketing and sustainable tourism development in his homeland Viet Nam.

Xuan Tran

Xuan Tran, a professor at University of West Florida (UWF), studies microeconomics and macroeconomics and consumer behavior psychology in hospitality and tourism. Tran earned a Ph.D. in Hospitality, Recreation and Tourism at the University of Utah. He has written books and other academic articles that were published in Annals of Tourism Research, Anatolia, International Journal of Electronic Finance, Journal of Vacation Marketing, Tourism Analysis, among others. Before joining the UWF faculty, he taught at the University of Utah and at colleges in Japan, China, and Vietnam.

Bao Nguyen Le

Bao N Le is the Provost of Duy Tan University. He holds post-graduate degrees in different fields of Business Administration, Computer Science, and Hospitality Management. He is in charge of the Technology & Science division as well as the R&D Center of DTU. His interests are in smart hotel, data warehousing, film-making, graphics and animation design.