The Fondazione Eni Enrico Mattei series on Economics, the Environment and Sustainable Development
Edited by Alessandro Lanza, Anil Markandya and Francesco Pigliaru
Chapter 10: A tale of two tourism paradises: Puerto Plata and Punta Cana – the determinants of room price in the Dominican Republic using a hedonic function approach
Giovanni Ruta and Suzette Pedroso* 1. INTRODUCTION The objective of this chapter is to estimate the eﬀect of diﬀerent variables on room price in tourist areas in the Dominican Republic (DR). It has been generally argued that environmental quality matters for the tourism industry as environmental goods and services are among the main inputs in the tourism production function. The government is currently designing a plan that will set the rules and guide tourism development over the next 10–15 years. A major challenge of the plan is to make the best use of the lessons learned during the past 30 years of tourism development in the DR. The data have been collected through a hotel survey, carried out by Horwath, Sotero Peralta Consulting, a leading ﬁrm in tourism industry analysis in the DR. The data set is composed of 83 observations, taken from hotels in tourist areas along the Dominican Republic coast. DR coasts can be divided in seven ‘macro’ areas but our analysis will emphasize two of them, which have been characterized by substantial tourism development: Puerto Plata and the Altagracia provinces are the main all-inclusive resort poles in the DR. Development has diﬀered widely in the two areas, giving rise to a spectrum of challenges which manifest themselves in diﬀerent ways in each zone. Our analysis identiﬁes key areas of concern and provides insight into policy issues. 269 270 The economics of tourism and sustainable development 2. THE TOURISM INDUSTRY IN THE...
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