The economics of destination cards

Destination cards have been recognized as effective tools for promoting tourism destinations. However, their role as mechanisms for coordinating tourism service providers within the destination remains underexplored. We address this gap by developing an enriched version of the Hotelling price competition model to investigate the welfare effect of destination cards. We assume that a destination with two price-setting attractions and one complementary good (transportation) introduces a card offering discounts on attractions and free access to local transportation. We find that the card is welfare-improving, although it also alters the pricing strategy of the attractions and, under certain conditions, might reduce tourist surplus. • Destination cards allow to exogenously introduce coordination within a destination. • We develop an enriched version of the Hotelling price competition model. • We investigate welfare effects with and without destination cards. • We show that total welfare never decreases and that producer surplus increases. • We derive conditions under which consumer surplus reduces.

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Publication Details

Journal
Annals of Tourism Research
Published
2025-09-24
DOI
https://doi.org/10.1016/j.annals.2025.104036
Citations
1
Primary Topic
Digital Platforms and Economics
Type
article
Field-Weighted Citation Impact
2.23
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article

The economics of destination cards

Alessandro Fedele, Paolo Figini, Sonia Messori
1 citations
Annals of Tourism Research
Digital Platforms and Economics
2.23
article

The economics of destination cards

Alessandro Fedele, Paolo Figini, Sonia Messori
article en
1 citations

Abstract

Destination cards have been recognized as effective tools for promoting tourism destinations. However, their role as mechanisms for coordinating tourism service providers within the destination remains underexplored. We address this gap by developing an enriched version of the Hotelling price competition model to investigate the welfare effect of destination cards. We assume that a destination with two price-setting attractions and one complementary good (transportation) introduces a card offering discounts on attractions and free access to local transportation. We find that the card is welfare-improving, although it also alters the pricing strategy of the attractions and, under certain conditions, might reduce tourist surplus. • Destination cards allow to exogenously introduce coordination within a destination. • We develop an enriched version of the Hotelling price competition model. • We investigate welfare effects with and without destination cards. • We show that total welfare never decreases and that producer surplus increases. • We derive conditions under which consumer surplus reduces.

Annals of Tourism ResearchVol. 115
Free University of Bozen-Bolzano (IT), Universitat de Barcelona (ES), University of Bologna (IT)
Openalex Percentile: Top 9%
Digital Platforms and Economics
2.23
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