Market Structure of the German and British Tour Operators’ Industry Through the Analysis of the Package Tour Prices in the Balearic Islands.

Market structure of the German and British tour operators’ industry through the analysis of the package tour prices in the Balearic Islands.

Eugeni Aguiló, Joaquín Alegre and Maria Sard[i]

Abstract: In this paper we study a sample of package tour prices of German and British tour operators in the Balearic Islands. One of the proposes of this study is to analyse if there are significant differences in price between tour operators due to different factors than those associated to the characteristics of the offer (first hypothesis). These differences in price have been showed in Sinclair et al. (1990) by British tour operators in the resort of Malaga and in Aguiló et al. (2001) by German tour operators in Majorca. The main results point out differences in price between tour operators not associated with the characteristics of the package tour’s offer, that we interpret as an oligopolistic feature of the tour operators’ market. The genereted data is also useful to estimate the role that hotel chains play. Our second hypothesis is to contrast if the association of hotels in chains offset the tour operator’s market power.

Keywords: German and British tour operators’ industry; Balearic Islands; Package tour prices.

INTRODUCTION

The Balearic Islands could be one of the regions that best symbolised the Mediterranean sun and beach holidays. This type of tourism emerged in the 60’s and supposed a turning point in the evolution of tourism. Before this date few tourist visited the islands and all of them were of the upper class, after 1960 the middle and lower class can afford vacations due to several economical and cultural changes. One of the most important changes was the package tour made by tour operators, who due to the volume and standardisation of the packages generated economies of scale, and so, lower prices to tourist who become to arrive in mass. European consumers showed a growing tendency to this type of vacation, partly due to lower prices that,

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