Economic Effects of Advertising on Tourism Demand: A Case Study

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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.