Tourist arrivals is the main outcome variable of interest. Arrivals data measure the flows of international visitors to the country of reference: each arrival corresponds to one inbound touristic trip. If a person visits several countries during the course of a single trip, his/her arrival in each country is recorded separately. In an accounting period, arrivals are not necessarily equal to the number of persons traveling (when a person visits the same country several times a year, each trip by the same person is counted as a separate arrival). Being an island that is not close to other destinations, in STP’s case, number of arrivals is closer to the number of visitors within a year. _Arrivals_ data should correspond to the _inbound visitors_ by including both tourists and same-day nonresident visitors. All other types of travelers (such as border, seasonal and other short-term workers, long-term students and others) should be excluded, as they do not qualify as visitors. As noted by UNWTO (2018), data are obtained from different sources: administrative records (immigration, traffic counts, and other possible types of controls), border surveys or a mix of them. If data are obtained from accommodation surveys, the number of guests is used as an estimate of arrival figures; consequently, in this case, breakdowns by regions, main purpose of the trip, modes of transport used or forms of organization of the trip are based on complementary visitor surveys. The main variable of interest to this note is the log of yearly tourist arrivals (LN_ARR).

Unfortunately, the UNWTO does not report data for STP on arrivals by origin. The data only show aggregate arrivals from all origins, which is a major limitation of the analysis as it does not allow to disaggregate by type of tourist. It could be assumed that tourist origins are significantly correlated with their income, and then as done in the literature, European and American tourists are considered as the representatives of tourist tastes and behavior. As noted above, flight arrivals from developed countries are connected only through Lisbon, and as such, it can be safely assumed that most tourists are from Europe.

Expenditures by tourists is also an outcome variable of interest. Expenditures associated with the activity of visitors have been traditionally identified with the travel item of the Balance of Payments (BOP). In the case of outbound tourism, those expenditures associated with resident visitors are registered as “debits” in the BOP and refer to “travel expenditure”. As in the case of _inbound tourism_ , BOP data are used. The 2008 International Recommendations for Tourism Statistics consider that “tourism industries and products” include transport of passengers. Consequently, a better estimate of the tourism-related expenditures by resident and non-resident visitors in an international scenario would be, in terms of the BOP, the value of the travel item plus that of the passenger transport item.

A key variable for our analysis is the average spending per tourist. Given information limitations, this is approximated by the ratio between Expenditure and Arrivals, measured as the log of the ratio Expenditure / Arrivals (LN_EA). This is a proxy of prices paid by a representative tourist. As noted above, this aggregate and average measure is not rich enough to study the prices of different tourism services _._ Supply-side information is used from airline schedules on numbers of flights and seats. This corresponds to the total number of flights reported by commercial airlines among the destinations (including local flights within countries) and the seats that were reported available from each flight.

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