The Impact of Electricity, Gas and Water Price Increases on the Price Index of the Tourism Sector

Tourism is an economic sector with a high multiplier effect, which is referred to as the driving engine of economic growth and can bring prosperity to the entire economy as an economic stimulator. Since the tourism product has a high price elasticity, its pricing is of particular importance to maintain and increase the demand of this economic sector. The price of tourism products is a function of the costs of this sector, and the increase in costs, including the costs of electricity, gas and water consumption, can affect the price of the final product. Considering the tendency towards the gradual liberalization of energy prices, this research examines the effect of increasing electricity, gas and water prices on the price index of the tourism sector. For this purpose, the cost-based approach of social accounting matrix was used. Due to the multi-sectorality of the tourism product, a matrix was designed to include the inbound tourism sector and the domestic tourism sector as two distinct sectors in the production account. The findings of the research showed that a one-unit increase in the cost of electricity, gas and water caused a slight increase in the price index of the tourism sector, and a significant price increase can be expected in the tourism products following an increase in the price of these items.