An analysis of household expenditure behavior for hospitality and tourism goods and services: Implications for market segmentation

Liping A Cai, Purdue University

Abstract

This study investigated relationships between household vacation expenditure patterns and their sociodemographic characteristics. Founded on the theory of consumer behavior, the purpose of the study was to provide hospitality and tourism businesses with an empirical model that could be applied to evaluate substantiality and accessibility of their market segments. Four expenditure categories of lodging, food, transportation and recreation were examined. The results show that variations in household spending on each of them were significantly explained by a number of sociodemographic characteristics. The major findings included: (1) The expenditures were income inelastic; and for each category the elasticity varied between earned and unearned income sources. (2) Housing tenure and householder's education had consistent and positive impacts on the amount of spending; and the opposite was true for the number of children. (3) The association between householder's employment status and expenditures was strong and positive; and spending was not adversely affected by time-constraint factors. (4) Distinctive patterns were found among households with different ethnic backgrounds for all categories. Householder's occupation and age accounted for variations in spending on food and transportation; and the effect of marital status was present for lodging and food expenditures. (5) There was a significant seasonality factor in household spending patterns for every category. An important feature of the proposed model is the ability to differentiate substantiality into current and potential demands of market segments. This is made possible by the use of the tobit method, which allows for the decomposition of total marginal changes into conditional effects and market participation effects. It was found that more market responses were accounted for by market participation. The implications of this and other findings were discussed in the context of market segmentation research and practice.

Degree

Ph.D.

Advisors

Morrison, Purdue University.

Subject Area

Marketing|Economics|Recreation

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