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Tourism and advertising: Evidence from Virginia beach

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  • Vinod Agarwal
  • Gilbert Yochum

Abstract

In recent years, the City of Virginia Beach, Virginia, has been spending more than two million dollars per year to promote tourism for the city. However, very little is known about the effects of such advertising on overnight visitors. On the basis of a survey of 1,200 overnight visitors during the summer of 1991, this study estimates the effect on tourism and the subsequent fiscal effect of tourism advertising expenditures. The study also calculates a rate of return from advertising from the perspective of a governmental revenue maximization objective function. This paper develops a travel cost model of the impact of advertising on overnight visitation to the city. The model provides, ceteris paribus, that advertising expenditures of 2.4 million dollars in 1991 resulted in an estimated 600,000 additional visitors. The paper concludes that if the City's objective is to maximize public profit, then it should expand its advertising budget. Copyright International Atlantic Economic Society 1998

Suggested Citation

  • Vinod Agarwal & Gilbert Yochum, 1998. "Tourism and advertising: Evidence from Virginia beach," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 4(4), pages 384-397, November.
    • Handle: RePEc:kap:iaecre:v:4:y:1998:i:4:p:384-397:10.1007/bf02295692
    DOI: 10.1007/BF02295692
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    References listed on IDEAS

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    1. David B. Montgomery & Alvin J. Silk, 1972. "Estimating Dynamic Effects of Market Communications Expenditures," Management Science, INFORMS, vol. 18(10), pages 485-501, June.
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    Cited by:

    1. Michael Toma & Richard McGrath & James Payne, 2009. "Hotel tax receipts and the 'Midnight in the Garden of Good and Evil': a time series intervention seasonal ARIMA model with time-varying variance," Applied Economics Letters, Taylor & Francis Journals, vol. 16(7), pages 653-656.

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