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Economic Effects of Advertising on Tourism Demand: A Case Study

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  • Sarath Divisekera
  • Nada Kulendran

Abstract

The objective of this study is to quantify the long-term effects of advertising on tourism demand. A single equation demand model is specified which includes advertising as an explanatory variable along with other economic determinants of demand, prices and incomes. Using the Phillip–Hanson procedure, long-run elasticities of demand are estimated for Australian tourism from its major markets – Japan, New Zealand, the UK and the USA. The results indicate that Japanese and New Zealand tourists are more responsive to advertising than UK and US tourists and that they are also highly sensitive to prices compared with UK and US tourists.

Suggested Citation

  • Sarath Divisekera & Nada Kulendran, 2006. "Economic Effects of Advertising on Tourism Demand: A Case Study," Tourism Economics, , vol. 12(2), pages 187-205, June.
    • Handle: RePEc:sae:toueco:v:12:y:2006:i:2:p:187-205
    DOI: 10.5367/000000006777637502
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    References listed on IDEAS

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    1. Peter C. B. Phillips & Bruce E. Hansen, 1990. "Statistical Inference in Instrumental Variables Regression with I(1) Processes," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 57(1), pages 99-125.
    2. Taylor, Lester D & Weiserbs, Daniel, 1972. "Advertising and the Aggregate Consumption Function," American Economic Review, American Economic Association, vol. 62(4), pages 642-655, September.
    3. N. Kulendran, 1996. "Modelling Quarterly Tourist Flows to Australia Using Cointegration Analysis," Tourism Economics, , vol. 2(3), pages 203-222, September.
    4. Granger, C. W. J. & Newbold, P., 1974. "Spurious regressions in econometrics," Journal of Econometrics, Elsevier, vol. 2(2), pages 111-120, July.
    5. Divisekera, Sarath, 1995. "An Econometric Model of International Visitor Flows to Australia," Australian Economic Papers, Wiley Blackwell, vol. 34(65), pages 291-308, December.
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    Cited by:

    1. Manuel Rodríguez-Díaz & Rosa Rodríguez-Díaz & Ana Cristina Rodríguez-Voltes & Crina Isabel Rodríguez-Voltes, 2018. "Analysing the Relationship between Price and Online Reputation by Lodging Category," Sustainability, MDPI, vol. 10(12), pages 1-16, November.
    2. Anappattath Muhammed Salim & Thomas Shiby M., 2023. "Demand for Kerala’s International Tourism by the Top Three Source Markets: A Comparative Analysis," Acta Universitatis Sapientiae, Economics and Business, Sciendo, vol. 11(1), pages 208-226, October.
    3. Burak Darici & Ahmet Aydin & Fatih Ayhan & Merve Altaylar, 2023. "Macroeconomic Determinants of Tourism Demand Toward Emerging Markets," Istanbul Journal of Economics-Istanbul Iktisat Dergisi, Istanbul University, Faculty of Economics, vol. 73(73-2), pages 837-864, December.
    4. Shi, Hui, 2012. "The efficiency of government promotion of inbound tourism: The case of Australia," Economic Modelling, Elsevier, vol. 29(6), pages 2711-2718.
    5. Egon Smeral, 2007. "Tourismusstrategische Ausrichtung 2015: Weichenstellung im österreichischen Tourismus für mehr Wachstum und Beschäftigung," WIFO Studies, WIFO, number 28918.
    6. repec:ebl:ecbull:v:6:y:2008:i:45:p:1-16 is not listed on IDEAS
    7. Divisekera, Sarath, 2010. "Economics of tourist's consumption behaviour: Some evidence from Australia," Tourism Management, Elsevier, vol. 31(5), pages 629-636.

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