Accommodation services and package holidays in the CPI

The accommodation services subgroup and the package holidays subgroup of the consumers price index (CPI) had a combined expenditure weight of 1.49 percent at the June 2011 quarter. The sources and methods used to compile these subgroups are explained in this article.

Position in the CPI structure

The recreation and culture group of the New Zealand Household Expenditure Classification represented 9.12 percent of the expenditure in the CPI at the June 2011 quarter. Combined, the accommodation services subgroup and the package holidays subgroup make up about one-sixth of the expenditure in this group. Table 1 outlines the expenditure weights of the two subgroups and their classes.

Table 1

The accommodation services subgroup includes domestic accommodation such as hotels, motels, and camping grounds. Within this subgroup, hotels make up over one-quarter of the weight, motels over half the weight, and camping grounds the remainder. The package holidays subgroup includes both international and domestic package holidays. International package holidays makes up more than nine-tenths of the weight of the package holidays subgroup.

Expenditure weight estimation

Information from the 2009/10 Household Economic Survey (HES) and other sources was used to determine the relative importance of the recreation and culture group. The HES collected detailed information on the spending patterns of about 3,100 households. The HES was the primary source of information for accommodation services and package holidays.

Only overseas package holiday and accommodation costs prepaid in New Zealand are included in the expenditure weight for overseas package holidays. Any additional spending that occurs outside New Zealand is not included. Any expenditure on international airfares alone is included in the transport group under the international air transport class.

Item and sample selection

The CPI basket of goods and services is reviewed once every three years to ensure it continues to reflect household purchases. International package holidays includes both international accommodation prepaid in New Zealand, and packages that include both accommodation and airfares. International package holidays was added to the CPI basket in 2006. Before this, overseas package holiday expenditure was represented by international airfares.

Price collection

Prices for domestic accommodation are collected by quarterly postal survey. Statistics NZ surveys about 60 motels, 30 hotels, and 20 camping grounds. The price for a Friday and Saturday night stay is collected during the middle of the middle month of the quarter from hotels and motels. For these two accommodation types, the stay is for a double or twin room for two adults. The price for a Saturday night stay, on a caravan site with power, is collected from camping grounds.This stay is for a family group of two adults and two children. All prices are for accommodation booked two weeks in advance.

Statistics NZ staff collect international package holiday prices each month from the Internet, while prices for domestic package holidays are collected from travel agencies by Statistics NZ price collectors.

An international package holiday price includes return flights and accommodation, or accommodation only. Prices are collected for a stay about the middle of the month, including at least one weekend night, for bookings made one month in advance of the travel date. The length of stay depends on the destination. International package holiday prices are collected for travel to destinations in five regions (Australia, the Pacific, Europe, North America, and Asia). All prices include the relevant taxes, levies, surcharges, and any applicable booking fees.

A domestic package holiday is a special interest tour that includes transport and accommodation. Prices are collected in the middle month of the quarter, for bookings made two weeks in advance of the travel date.

Estimation

Prices for domestic accommodation and package holidays are used to directly calculate the New Zealand item-level index. This is because the prices are different for different locations, but the location is not strongly related to the location of residence. For example, domestic accommodation in Auckland would not be weighted by the population of Auckland, as the majority of customers would live in other regions.

For international package holidays, prices collected monthly are averaged to quarterly prices. This helps to ensure that particularly cheap, or expensive, months do not have undue influence on quarter-to-quarter price comparisons. The monthly average prices are used to calculate quarterly average prices by weighting each monthly average price by the number of days in the month in which it was collected.

Quality assurance

The CPI aims to measure the price change of the same product at each sampled outlet or business over time. In practice, sampled products may become unavailable, change, or become unrepresentative. When this occurs, there may be a change in quality and an adjustment is made so that only the estimated 'pure' price change is shown in the CPI. For example, a price increase (decrease) that is deemed to be purely the result of better (poorer) quality materials or service should be adjusted for and the price change not shown.

If a surveyed hotel at a particular destination becomes unavailable, then a similar hotel is priced instead. The replacement hotel is chosen from available information, including its star rating. For example, a 3-star hotel would be replaced with a similar 3-star hotel.

External influences on prices

The most common external influence on both accommodation services and package holidays is seasonal variation. Package holidays, for example, tend to show higher prices around Christmas time than at other times of the year. Likewise, you would expect domestic accommodation to be more expensive around public holidays. Prices for international package holidays often rise in December quarters and then fall in March quarters, while domestic accommodation services often rise in price in December quarters and then peak in March quarters. Both services tend to be lower in June and September quarters. 

Special events (eg musical or sporting) could also influence domestic accommodation and package holiday prices. This influence may be muted if the event is based in one city, but for a more wide-spread event, a larger influence could be expected.

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