Measuring price dynamics of package holidays with transaction data

In Germany, package holidays, which consist of a bundle of flight and accommodation services, are an important driver of consumer prices. Several challenges arise when measuring the price development of package holidays, for example the quality of accommodation, the timing of the booking, the treatment of out-of-season services as well as the underlying holiday season. Statistical practices are currently based on sampling offer prices. As a possible alternative, transaction price data from a commercial booking system are analysed in this study. Our dataset comprises both online bookings and bookings made via stationary travel agencies of package holidays on a daily basis. The large sample size allows for a disaggregation by individual holiday destination.The paper analyses the possibilities and challenges in compiling a price index out of transaction data for flight package holidays. The dataset raises a number of methodological issues, for example the grouping of unstructured text information into meaningful categories, the handling of missing information or the identification of outliers. Moreover, various index aggregation methods are analysed, which include hedonic regressions, stratification, and also a multilateral index method. Applied to six major holiday destinations for German travellers, all transaction-based methods under consideration exhibit similar price dynamics, pointing to robust results for destination-based price indicators for package holidays.