... them."1There are at least five variables to which tourism demand can be affected by: Income, Price, Exchange Rate, Transportation Costs and Population. The demand of foreign holidays is elastic to price fluctuation because of its highly competitive nature. The changes in price due to cost increases and higher taxation have a dramatic effect on the revenue gain from overseas visitors. When looking at taxation imposed by governments, research has proven that, main concerns with respect to incidence of the tax are that of price elasticity of demand and price elasticity of supply for hotel rooms. Firstly, if demand is elastic then consumers (tourists, guests) will react to a price increase as a result of a tax by seeking other places to stay in order to avoid payment extra tax as well as the original room rate. Therefore, in some competitive situations, hotels will find it impossible to pass on additional ...

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