ABSTRACT
This chapter offers a theoretical and empirical framework enabling to disentangle the data of total household expenditure on vacation to its components and thus gain an insight into the different decisions made on vacations expenditure and the possible effect of changes in income and prices on these decisions. As a result the demand function, which describes the relationship between the quantity demanded and the price and income of the consumer, turns into an Engel curve. Despite this accumulation of previous work, these tourism demand modeling studies have mostly neglected to distinguish between the quality and quantity components of tourism expenditures. Income and price elasticities for both quality and quantity of travel and onsite demand are derived from the following model. However, since the total vacation expenditure still rises faster than income this means that the households channel the increase in income to upgrade the tourism and travel services that they consume.
