Conference paper

ADVERTISING EFFICIENCIES IN THE HOSPITALITY AND TOURISM INDUSTRY

Yatin N. Bhagwat ; Seidman College of Business, Grand Valley State University, USA
Marinus DeBruine ; Seidman College of Business, Grand Valley State University, USA

Abstract

Advertising provides growth in sales volume for the new products and services. The hospitality industry relies heavily on advertising through travel journals and travel sections of print media,
television media, and the internet. The hospitality industry encompasses hotels, cruise lines, theme parks and holiday resorts. The motivation for this study stems from the belief that the results can be used by managers in the four segments of the industry to establish promotional strategy based on efficacy. The focus of this paper is to investigate the long-term relationship betv/een accounting defined changes in earnings and changes in advertising expenditure by estimation of the degree of advertising leverage - a measure similar to degree of total leverage. This study develops and measures the earnings elasticity of advertising expenditures (coined the degree of advertising leverage or DAL) using a log-linear model.
The aim of the study is to measure overall returns to advertising effort when increasing pecuniary economies and decreasing technological economies of scale in advertising are concomitantly present. Advertising intensity varies in the industry from a low of about 2,5% for Casinos and Speedways to 5% for Cruise Lines and over 10% for Hotels, The findings show the effectiveness of advertising as a tool for maximizing earnings and company value in tourism-related industries.

Keywords

Degree of Advertising Leverage (DAL); hotel industry; tourism

Hrčak ID:

76294

URI

https://hrcak.srce.hr/76294

Publication date:

1.12.2008.

Article data in other languages: croatian

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