Working Paper | 2012

An Exploration of Luxury Hotels in Tanzania

by 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: Natural Environment; Business Ventures; Luxury; Revenue; Price; Developing Countries and Economies; Accommodations Industry; Tourism Industry; Tanzania;

Citation:

Comin, Diego A. "An Exploration of Luxury Hotels in Tanzania." NBER Working Paper Series, No. 17902, March 2012.