Tourism Price Competitiveness as a Driver of International Tourist Arrivals

ABSTRACT:The price of a tourist product represents an inevitable determinant of a destination’s tourismcompetitiveness. Prices are an essential measure for making decisions about whether voyages will make orwhere to travel. The key objective of this study is to examine the impact of pricecompetitivenessoninternationaltourist arrivalsin Sri Lanka.The study used the annual time series data of pricecompetitiveness indices, which were extracted from both various issues of the annual statistical report of SriLanka tourism development authority and World bank development indicators for1978-2017.The studyobjective was analyzed using the Vector Error Correction Model. The results show that the index of touristaccommodation prices and exchange rate impact positively on international tourist arrival in the long runwhereas the index of tourist food prices negatively influences the universal tourist arrival in Sri Lanka. Theresults further reveal that, while the index of tourist accommodation price and exchange rate not accompanyingtourist arrival, price competitiveness indices of food and transport have a positive impact on international touristarrivals in the short -term.There fore, the study suggests that attention should be taken to enhance the tourismprice competitiveness of tourist products along with qualitative factors affecting the attractiveness of a touristdestination.In specific, the study recommends the government of Sri Lanka should focus on both ticket taxesand airport charges and fuel price levels to contribute to as beneficial determinants to increase the positiveimpact of price competitiveness.

KEYWORDS: International tourist arrival, Price competitiveness index, destination choice decisions