Working Paper: NBER ID: w17902
Authors: Diego A. Comin
Abstract: Tourism is a tradable service activity that could allow some African countries to generate significant growth. Tanzania, given its unique natural assets, is an ideal candidate. However, despite being so richly endowed in touristic resources, Tanzania receives very few tourists and revenues from tourism. To explore the determinants of this performance, I conduct an international survey for upscale hotel managers to measure supply-side constraints on the operation of hotels. The survey reveals that hotels in the safari area in Tanzania are more expensive than comparable hotels, and that this difference in price cannot be accounted for by differences in supply constraints. Further, using cross-country panel data, I show that upscale hotel prices account for a significant fraction of cross-country differences in tourists.
Keywords: tourism; Tanzania; luxury hotels; economic growth
JEL Codes: L1; L89
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| high hotel prices in Tanzania (Z30) | high markups (D43) |
| high markups (D43) | decrease in tourist numbers (Z30) |
| upscale hotel prices (Z30) | number of visitors per capita (Z38) |
| high hotel prices (Z30) | attract different type of tourist demographic (Z30) |
| competition and quality of hotel services (Z30) | hotel prices (Z30) |