Tourism Economics , 2009, 15 (1), 153–180 Ex post demand for Australian tourism goods and services SARATH DIVISEKERA School of Economics and Finance, Victoria University, PO Box 14428 MC, Melbourne 8001, Australia. E-mail: Sarath.Divisekera@vu.edu.au. This study examines the economic parameters underlying the ex post demand for Australian tourism goods and services from ten source markets in Asia, Europe and North America. The results suggest that demand for the five broad commodity aggregates – accommodation, food, transport, shopping and entertainment – representing the key consumption by tourists, is price-inelastic, implying that all goods are necessities from the tourist’s point of view. This result is consistent with the empirical reality that, once he or she has arrived in a destination, a tourist is bound to consume the available goods and services. A second important finding is the apparent complementarity of demands. This indicates that tourists tend to purchase a bundle of goods and services, all of which are necessary for the maximization of utility from visitation. The analysis also suggests that the underlying price elasticities exhibited through cross-price elasticity values have important implications for how price sensitivities can be better understood. Keywords: demand systems; tourist consumption; expenditure allocation models; inbound tourist expenditure; price elasticities of tourism demand; Australia With the emergence of ‘tourism’ as an important activity generating a wide variety of benefits, many nations around the globe – both in the developed and developing world – have embraced tourism promotion as an alternative growth strategy to enhance national economic performances. With this renewed interest, tourism as an economic activity has generated an unprecedented level of attention among policymakers, industry practitioners and academics alike and has resulted in a large number of studies addressing various aspects of this activity. One key area of focus has been on demand. Tourism is largely a demand-driven activity and the very economic benefits flowing from it depend This paper was completed during a visit to the National Centre for Tourism Policy Studies (NCTPS), University of Limerick, Ireland. The author thanks Professor J im Deegan for his generosity, hospitality and stimulating discussions, which improved the contents of the paper.