The case for using destination‐level price elasticity of demand for lodging services

To maximize lodging revenues and tax generation within their destination and to insure competitiveness against other destinations, local governments and lodging industry management need to understand the relative sensitivity of consumers to changes in the price of lodging away from home. Previous price elasticity of demand for lodging (EDPLodging) studies have focused on elasticity across classes of properties based on location relative to the city center, geographic region within the United States, and property size rather than on specific destinations. This study demonstrates that EDPLodging measured at the individual destination level may be more useful than EDPLodging measured at the aggregate level to local governments setting accommodation tax rates and to lodging industry management in setting prices.