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Advertising expenses and operational performance: Evidence from the global hotel industry

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  • Polemis, Michael L.
  • Stengos, Thanasis
  • Tzeremes, Nickolaos G.

Abstract

We investigate the impact of advertising on hotel management companies’ (HMC) operational efficiencies on a sample of 90 international HMCs over the period 2010–2019. We employ time-dependent conditional frontier estimators to investigate the effect on HMCs’ technological change and technological catch-up levels. Our findings support the existence of a non-monotonic convex relationship between HMCs’ advertising expenses and their operational performance. Lastly, we also utilize the double bootstrap approach in a truncated regression setting to validate the overall effect of advertising expenses on HMCs’ operational performance levels. The findings suggest that advertising expenses decrease operational inefficiencies.

Suggested Citation

  • Polemis, Michael L. & Stengos, Thanasis & Tzeremes, Nickolaos G., 2020. "Advertising expenses and operational performance: Evidence from the global hotel industry," Economics Letters, Elsevier, vol. 192(C).
    • Handle: RePEc:eee:ecolet:v:192:y:2020:i:c:s0165176520301579
    DOI: 10.1016/j.econlet.2020.109220
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    References listed on IDEAS

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    More about this item

    Keywords

    Advertising expenses; Efficiency and productivity; Hotel management companies; Nonparametric frontier analysis;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising
    • Z31 - Other Special Topics - - Tourism Economics - - - Industry Studies

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