Microeconomic determinants of domestic tourism expenditure in India: Evidence from two-part model

Abstract

Using a nationally representative household survey from India, we examine individuals' domestic leisure tourism participation and trip expenditure decisions together. We control a large set of explanatory variables broadly classified as economic, socio-demographic, and trip-related characteristics. We use two-part (hurdle) model to allow explanatory variables to have differential effects on each decision. We find that education is an important determinant for both decisions. Moreover, trip-related characteristics (party size, stay length, accommodation type, travel mode, and destination) are also important determinants of trip expenditure in addition to economic and socio-demographic characteristics. The unconditional quantile regression results show the heterogeneity in the impacts of many variables across the trip expenditure distribution. The differences in trip expenditure across age groups are primarily in the upper half of the trip expenditure distribution. A trip arranged under a tour package leads to an increase in trip expenditure at the higher quantiles of the trip expenditure distribution.