*6.2. Campsites and Exchange Rate*

If a country depreciates the value of its own currency, it becomes less expensive and more attractive to visit. The size of this effect depends on many factors, including the extent of the substitution effect. If the choice is between holidaying in two countries that offer almost the same service, the effect of a slight change in the exchange rate may be considerable. If a tourist is seeking sun and beautiful beaches and is unsure whether to travel to Portugal or Spain, a slight change in the relative prices can have a major impact Patsouratis et al. (2005). In other situations, there are few equal options, in which case, the effect of the exchange rate will be small. Such factors explain why there is a wide gap in the estimation of the exchange rate elasticity.

Although the Norwegian currency has depreciated considerably over the past 10 years, foreigners are still experiencing Norway as an expensive country to visit Jacobsen et al. (2018). The price elasticity of a change in the real exchange rate provides important information about the impact of changes in relative prices. According to our analysis, for German camping visitors, this exchange rate elasticity effect was 0.8. A weaker Norwegian currency leads to more German overnight days at Norwegian campsites (Hypothesis H1). The effect was significant, but the price elasticity was under 1.0. Compared to many other international studies, the influence was rather small. Many German tourists may prefer to experience the midnight sun and see mountains and fjords, often combined with boat trips and fishing, independent of the currency rate Chen and Chen (2016).

Due to multicollinearity, we excluded the value of the Swedish currency in the model for Germany (see Note (2), Table 1) However, our analysis of the data suggested that a change in the Swedish krone had little impact on German camping tourists in Norway. One possible explanation is that the change in the Swedish exchange rate in the examined period was too small for German visitors to factor it into their decisions (see Figure 1). Therefore, it might explain why this analysis cannot prove that a change in the Swedish currency in relation to the Norwegian currency has any significant effect on German visitors. In addition, Germans may find that Norway and Sweden have different offers for camping tourists. This limits the substitution effect. On the other hand, a change in the Swedish krone relative to the euro will have an impact on the number of Swedish visitors to Norwegian campsites. The results showed that a weakening of the Swedish currency compared to the euro (Figure 1) resulted in fewer Swedish visitors (Hypothesis H2) (a strengthening of the Swedish currency against the euro will then have the opposite effect). One possible reason is that Swedes focus on the value of their national exchange rate relative to the euro. If the Swedish currency weakens, fewer Swedes choose to go camping abroad and are more likely to arrange a domestic holiday. The literature indicates that there is often complementarity between different countries. Swedish camping tourism abroad can be combined with visiting neighboring countries (Denmark, Finland, and so on). This may be another factor that explains the significant positive link (elasticity = 0.52) between Swedish currency (relative to the euro) and Swedes' use of Norwegian campsites.
