An Analysis of the Micro-determinants of Domestic Holiday Expenditure by Households in the Republic of Ireland

Abstract

The dramatic decrease in overseas visitors to Ireland in 2020 due to the Covid-19 pandemic has demonstrated the risks, for the tourism sector, associated with being over-reliant on international tourism. Growing the domestic tourism market is now critical for sustaining jobs and businesses within the sector. The purpose of this paper is to examine the micro-determinants of expenditure on domestic holidays by households in the Republic of Ireland. Using data from the Irish Household Budget Survey 2015-2016, instrumental variable estimators are used to conduct the analysis. The results reveal that disposable income, being located in the Border, Midlands and Western region and being aged between 55 and 64, positively impact on domestic holiday expenditure. Non-manual workers, manual skilled, semi-skilled and unskilled workers and farmers and agricultural workers spend significantly less on domestic holidays relative to employers and managers. The findings are important from a policy and tourism industry perspective. As the results reveal an insight into the consumer, initiatives can be developed to stimulate further expenditure in the domestic tourism sector.