KI Traveller's Levy Economic Impact Assessment - Kangaroo Island ...

Commercial-in-Confidence
KI Traveller’s Levy
Impact Assessment
71% indicated they would support a levy, with the figure marginally higher for
those surveyed at the end of their trip (around 76%, compared with 67%
surveyed pre-trip); and
83% would not be influenced in their decision to visit the Island by a modest
traveller’s levy in the range of $10 to $15.
Business travellers and those visiting friends and relatives are less price sensitive than
those travelling for leisure, as they typically need to travel to a specific destination at a
specific date, with little flexibility in either. Leisure on the other hand is far more
discretionary.
Those who have travelled further to get to the Island, especially international visitors,
will be less mindful of the levy when making their decision whether to visit the Island,
as it accounts for a very small component of expenditure on their overall trip in
Australia. Domestic intrastate visitors, however, are likely to be more responsive to
price increases as a levy represents a much larger shift in the overall cost of a trip.
Though the evidence base is limited, the modelling therefore assumes a higher
elasticity of demand for intrastate visitors than for those travelling from further afield.
4.2.3 PER-VISITOR EXPENDITURE
The role of visitor expenditure in the modelling is twofold. First, it provides the expenditure
base to which a levy is applied to derive the demand impacts. That is, a levy is represented
in the modelling as the percentage change in the total cost of a trip to KI (e.g. a $10 levy
represents a 2% increase in total travel cost if the average expenditure is $500 per visitor).
The elasticities in Table 4.2 are then applied to this percentage change to determine the
impacts on demand. For a given elasticity of demand, therefore, the impacts will be greater
the lower the per-visitor expenditure (i.e. the impacts on intrastate visitation are greater not
simply due to the higher elasticity parameter, but to the greater proportional change that a
given levy represents). Secondly, it determines the dollar-value of KI tourism expenditure
that is foregone for every visitor which is deterred by the introduction of a levy.
Per-visitor expenditure estimates adopted in the modelling are derived from TRA data.
Again, visitors are distinguished based on origin and purpose of visit, with Table 4.3 below
outlining the parameters adopted. Per-visitor expenditure for each category is estimated
through use of average per-night expenditure from TRA data (see Section 1.2) and estimates
of the average length of stay of each visitor category derived using TRA data. 12
TABLE 4.3: PER-VISITOR EXPENDITURE BY VISITOR TYPE 11
Leisure VFR Business/Ed
International $273 $1,000 $333
Interstate $548 $417 $218
Intrastate $568 $653 $290
Daytrip $130 $130 $130
12 In the case of international travellers who were visiting friends and relatives, this estimate was adjusted
downwards due to the unusually high estimated length of stay (10 days compared with 2-4 days for all other
categories) and also the expectation that those visiting friends and relatives spend slightly less than other
categories (as they often stay with relatives rather than in a hotel, and may consume less tourism product e.g.
eating out).
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