ASEAN-U.S. Trade in Information-Intensive Services: Policy Issues

We estimate a more complete model of the demand for and supply of hotel rooms and explore its implications for the exportability of a hotel room tax. The modelling of the demand for travel to Hawaii is expanded, taking into account not only the effect of a hotel room tax on the demand for hotel rooms by visitors subsequent to their arrival, but also its impact on the decision to visit Hawaii. Our results suggest that our earlier estimates of the elasticity of demand (in absolute terms) and supply for hotel rooms to be underestimated (1.0 vs. 1.5) and (2.0 vs. infinity), respectively. Taken together, the results suggest that hotel room taxes are fully exportable to tourists.