REFERAT SA ZNANSTVENOG SKUPA CONFERENCE PAPER

UDC/UDK 659.127.4:640.4

JEL classification; M37L83

Yatin N. Bhagwat*

Marinus DeBruine"

USPJESNOST OGLASAVANJA U HOTELSKOJ I TURISTICKOJ INDUSTRIJI

ADVERTISING EFFICIENCIESIN THE HOSPITALITY AND TOURISM INDUSTRY

SAZETAK: Oglasavanje osigurava rast prodaje novih usluga i proizvoda, Hotelska se industrijasnazno oslanja na oglasavanje putem putnih casopisa, priloga o putovanjima u tiskanim medijima, putemtelevizije i intemeta. Hotelska industrija obuhvaéa hotele, krstarenja, zabavne parkove i ljetovalista, Mo-tivacija za ovu studiju proizlazi iz vjere da se menadzeri u Cetiri gore navedena segmenta industrijemogu koristiti njenim rezultatima da bi utvrdili promotivnu strategiju koja se temelji na djelotvomosti.Ovaj se rad bavi istrazivanjem dugoroCnog odnosa izmeCtu raCunovodstveno definiranih promjena pri-hoda i promjena troskova oglasavanja putem procjene stupnja utjecaja oglasavanja - mjere sliöne stupnjuukupnog utjecaja. Ova studija razmatra i mjeri dohodovnu elastiCnost troskova oglasavanja (u daljnjemtekstu koristimo englesku skracenicu DAL) koristeci log-lineami model, Cilj je izmjeriti sveukupni pov-rat u oglasavanje uz istovremeno povedanje novöane ustede i smanjenje tehnoloske ekonomije razmjerau oglasivanju, Intenzitet oglasavanja varira od niskih 2,5% za kockamice i trkaée staze do 5% za krsta-renja i preko 10% za hotele, Rezultati pokazuju uspjesnost oglasavanja kao alata za maksimiziranje za-rade i vrijednost tvrtke u turizmu,

KLJUCNE RIJECI: stupanj utjecaja oglasavanja (DAL), hotelska industrija, turizam,

SUMMARY: Advertising provides growth in sales volume for the new products and services. Thehospitality industry relies heavily on advertising through travel journals and travel sections of print me-dia, television media, and the internet. The hospitality industry encompasses hotels, cruise lines, themeparks and holiday resorts. The motivation for this study stems from the belief that the results can be usedby 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 changesin 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 ofadvertising 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 eco-nomies and decreasing technological economies of scale in advertising are concomitantly present. Ad-vertising intensity varies in the industry from a low of about 2,5% for Casinos and Speedways to 5% forCruise Lines and over 10% for Hotels, The findings show the effectiveness of advertising as a tool formaximizing earnings and company value in tourism-related industries,

KEYWORDS: Degree of Advertising Leverage (DAL), hotel industry, tourism

Professor of Finance, Seidman College of Business. Devos Hall 4th Floor, 401 West Fulton Street, Grand ValleyState University, Grand Rapids, MI 49.')04

" Associate Professor of Accounting, Seidman College of Business, Devos Hall 4th Floor, 401 West Fulton Street,Grand Valley State University, Grand Rapids, MI 49504

Y. N, Bhagwat, M, DeBruine: Uspjeânost oglaäavanja u hotelskoj i turistiikoj industriji 201

1. UVOD

Gospodarska vaznost turizma i rekrea-tivnih centara stalno dobiva na vaznosti,Prema U,S. Travel Data Center (Centra zaprikupljanje podataka o putovanjima) turi-zam je vodeci poslodavac u 15 drzava.Svaka drzava i tvrtka odvajaju novae zapromociju. Povrat ulozenog u turistiôkupromociju mjeri se konverzijskim studijamakonverzije i upitnicima koji prate svjesnost,pamcenje, namjere putovanja te ostvarenaputovanja. Ove studije pokazuju odnos iz-medu specificne forme promocije i njenogutjecaja na ukupnu turistiôku potrosnju.Novi pravac struöne marketinske literaturepromatra oglasavanje kao ulaganje kojestvara nevidljive vrijednosti. Ove nevidljivevrijednosti izoliraju tvrtke od promjena naburzovnom trzistu te tako smanjuju sistem-ske rizike kod takvih tvrtki. Ulaganje u is-trazivanje i razvoj osigurava razvoj novihproizvoda, a ulaganje u oglasavanje osigu-rava rast prodaje svih proizvoda.

Cilj je ove studije izmjeriti utjecaj tros-kova korporativnog turistiCkog oglasavanjana prihode javno izlistanih tvrtki u hotelskoji turistiôkoj industriji. Posehno se bavimoprocjenom elastiénosti prihoda od oglasava-nja kod javno izlistanih hotela, kockarnica, itrkaCkih staza, te tvrtki koje nude krstarenjau okviru hotelijerstva, rekreacije i industrijeslohodnog vremena.

Postojeca literatura o troskovima ogla-savanja niti postulira neki odreden odnosizmedu prihoda racunovodstveno odredenihprihoda i ulaganja u oglasavanje niti empi-rijski testira postojanje takvog odnosa uhotelskoj i turistiôkoj industriji. Elastiônostoglasavanja moze hiti korisna mjera za me-nadzere, zakonodavce, financijske analiti-ôare i direktore u industriji oglasavanja.Mjera oglasavanja je genericki termin kojiukljuöuje vecinu oblika marketinske komu-nikacije te ukljuöuje promociju i ostale ele-

I. INTRODUCTION

The economic importance of tourism andrecreational outlets has been gaining impor-tance. Tourism is a leading employer in fifteenstates according to U.S. Travel Data Center.Every state and business allocates funds forpromotional efforts. The returns to tourism ad-vertising are measured hy conversion studiesand surveys tracking awareness, recall, travelintentions and trips undertaken. These studiesprovide relationship between a specific form ofpromotion and its impact on total tourism ex-penditures. A new strand of literature in thefield of mai'keting views advertising as an in-vestment that creates intangible assets. Theseintangible assets insulate firms fi-om the gyra-tions of the stock market and hence reduce thesystematic risk of such firms. Investment inResearch and Development develops newproducts and investment in Advertising pro-vides growth in sales for all products.

The objective of this study is to measurethe impact of corporate tourism advertising ex-penditures on earnings of publicly traded firmsin the hospitality and tourism industry. Specifi-cally, we estimate the earnings elasticity of ad-vertising of publicly traded firms in hotel,casino and speedways, and cruise line seg-ments of the hospitality, leisure and recrea-tional industries.

Extant literature on advertising expendi-tures neither postulates a definite relationshiphetween accounting defined earnings and in-vestment in advertising nor empirically teststhe existence of such a relationship in the tour-ism and hospitality industry. The elasticity ofadvertising may he a useñil measure for man-agers, lawmakers, financial analysts and adver-tising industry executives. The measure"advertising" is a generic term and includesmost forms of marketing communications andincludes sales promotions and other elementsdeployed hy marketers to reach target markets.

202 Acta turistica. Yol 20 (2008), No 2, pp 145-254

mente kojima se marketingasi koriste da bidosegli svoja ciljana trzista.

Qva je studija slicna prethodnom istrazi-vanju na polju industrijske organizacije (10)jer se ponovno vraca na odnos ulaganja uoglasavanje i njegov povrat ulagaôima. Ovoje prosireni rad u odnosu na onaj prethodnonapravljen u 10 i marketingu jer primjenjujenovu paradigmu u hotelskoj i turistickoj in-dustriji s ciljem mjerenja utjecaja oglasa-vanja na profite ñrmi.

2. PRIKAZ LITERATURE

Oglasivacke poruke moraju utjecati, in-formirati, motivirati i uvjeriti kako bi sekreirala svjesnost o marki, pokusna prodajai prihvatijiva slika marke. Prodajna promo-cija je tip marketinske komunikacije ciji jecilj ohrabriti djelovanje. American Marke-ting Association definirá prodajne promo-cije kao medijski i nemedijski pritisak kojise primjenjuje na prethodno odredeni ogra-niCeni vremenski period kako bi se stimuli-ralo pokusno i impulzivno kupovanje, pove-cala potraznja potrosaca ili poboljsala kva-liteta proizvoda. Prodajne promocije susklop tehnika koje poticu Clanove tri ciljneskupine - potrosace, prodajne predstavnike itrgovinu - kako bi odmah poceli djelovati.

Ekonomija oglasavanja

Diferencijal kratkoroCne oglasivackesnage (STAS) je mjera kupnje robne markeuslijed jednokratne izlozenosti oglasivackimporukama i stanja neiziozenosti. Uöinak di-ferencijala kratkorocne oglasivacke snagemoze jaöati ako je oglasivaôka aktivnost uskladu sa promotivnim aktivnostima. Krat-korocni utjecaj oglasavanja stvara utjecaj naponasanje i generira unutrasnji zamahmarke. Unutrasnji zamah je spoj potrosace-vog iskustva s robnom markom i dodanihvrijednosti izgradenih prethodnim oglasava-njem. Jones (1995) odbacuje ideju da tajspoj rezultira medusobnim pojaöanjem -

This study is similar to prior research in thefield of Industrial Organization (10) as it revis-its the notion of a relationship between adver-tising investment and its returns tostakeholders. It is an extension of prior workdone in 10 and Marketing as it applies a newparadigm in the hospitality and tourism indus-try setting to measure the impact of advertisingefforts on corporate profits.

This paper is organized as follows. In Sec-tion II a review of the literature related to ad-vertising in economics, and hospitality andtourism industry is done. Section III discussesthe model and the empirical tests conducted. InSection rv the results are discussed and theconclusion is provided in Section V.

II. LITERATURE REVIEW

Advertising messages must influence, in-form, motivate, and persuade to create brandawareness, trial sales, and a likeable brand im-age. Sales promotion is a type of marketingcommunication. The objective of sales promo-tions is to encourage action. The AmericanMarketing Association defines sales promo-tions as media and non-media marketing pres-sure applied for a predetermined, limited pe-riod of time in order to stimulate trial and im-pulse purchase, increase consumer demand, orimprove product quality. Sales promotions area set of techniques that prompt members ofthree target audiences - consumers, sales repre-sentatives, and the trade - to take immediateaction.

Economics of Advertising

The Short-Term Advertising Strength(STAS) differential is a measure of a brand'spurchase between a single exposure to adver-tising messages and no exposure state. The ef-fectiveness of the STAS differential can growstronger if advertising activity is concomitantwith promotion activity. The short-term adver-tising effect creates a behavioral effect and

Y. N. Bhagwat, M. DeBruine: Uspjeänost oglaáavanja u hotelskoj i turistiikoj industriji 203

odzvanjatiju - sto opet rezultira rastom. Rastunutrasnjeg zamaha moze utjecati na pro-daju robne marke tijekom vremenskog raz-doblja koje se öesto moze mjeriti desetlje-éima.

Jones (1995) je analizirao stotine oglasakoji su koristili samo jedan izvor podataka(informacije o koristenju medija i proizvodakupljenih u jednom domaéinstvu) i zaklju-Cio da najjaCe oglasivaôke kampanje moguutrostruöiti prodaju, dok najslabije mogudoprinijeti padu prodaje vise od 50%. O in-ternom zamahu razmislja ovako: kako rastetrzisni udio robne marke troskovi njezinogoglasavanja rastu sve manjom stopom, jerkako robna marka raste njezini ju potrosaCisve vise cijene. Stoga marka treba sve ma-nju promotivnu podrsku koja se crpi iz pro-fita kako bi se odrzala i povecala prodaja, ato opet rezultira sve vecim povratom na ula-ganje prema oglasivaökoj ljestvici.

Stigler (1958) je vrlo rano prouCavaoodnos izmedu oglasavanja kao postotkaprodaje (u daljnjem tekstu se définira kaooglasivacki intenzitet) i prosjeône velicinetvrtke kod 48 proizvodnih industrija. Prijevise od 50 godina industrije potrosaCkih do-bara oglasivale su se gotovo Cetiri puta visenego proizvodaCi mjereno oglasivackim in-tenzitetom. Ali unutar svake grupe male sutvrtke nesto snaznije oglasivale nego veliketvrtke. Schmalensee (1972) tvrdi da ako, naniskim nivoima proizvodnje, sukcesivnopovecanje troskova oglasavanja utjeöe napovecanje prodaje, onda oglasavanje etabli-ranih tvrtki moze povisiti razinu uCinkovi-tog ulaska na trziste, a time proizvesti i do-datne prepreke ulasku na trziste.

Studija Benjamina i drugih (1960) poka-zuje opadajuci povrat u odnosu na uôesta-lost. Prosirenje djelovanja nemlnovno tnorapovecati frekventnost s dodavanjem novihmedija u raspored komunikacijskih aktiv-nosti. Stoga, povecanje troskova ulaganjamora dovesti do smanjenog povrata. Dakle,empirijski dokazi u ekonomskom polju in-dustrijske organizacije pokazuju da oglasa-

generates internai momentum of a brand. Inter-nal momentum is a compound of consumers'experience of the brand and the added valuesbuilt by previous advertising. Jones (1995)supplants the notion that the compound resultsin a mutual reinforcement - a resonance - re-sulting in growth. .\s the internai momentumgrows, it can influence the brand's sales ova-periods of time that are often measured in dec-ades.

Jones (1995) analyzed hundreds of ads us-ing single source data (information about me-dia use and products purchased by a singlehousehold) and concluded that the strongest adcampaigns can triple sales, whereas the weak-est can contribute to sales falling by more than50 percent. He makes a couple of observationsabout internal momentum. As a brand grows inmarket share, its advertising expenditure tendsto increase at a decreasing rate. As the brandgrows, its consumers hold it in increasing es-teem. As a result the brand needs less profit-draining promotional support to maintain andboost sales resulting in increasing returns toadvertising scale.

Stigler (1958) very early on examined therelationship between advertising as a percent-age of sales (defined hereafter as advertisingintensity) and the average size of companies in48 manufacturing industries. More than fiftyyears ago the consumer goods industries ad-vertised almost four times as much as producergoods as measured by advertising intensity.But within each group small firms advertisedslightly more heavily than large firms.Sehmalensee (1972) states that if, at low levelsof output, successive increments to advertisingspending have increasing effect on sales, ad-vertising by established firms may increase thescale at which efficient entry must take placeand thereby add to barriers to entry.

A study by Benjamin et. al. (1960) showsdiminishing returns to ñ^equency. Expansion ofreach is bound to increase in frequency as me-dia are added to the communication schedule.Hence, increase in advertising spending must

204 Acta turistica, Vol 20 (2008), No 2, pp 145-254

vanje ne dovodi do povecanja minimalneveliöine tvrtke, bilo u nekoj opéoj ili pakspeeifiCnoj industriji. Nema direktnih do-kaza pomocu vremenskih serija. Istrazivacikao Schmalensee takoder vjeruju da nemarazloga sumnjati u postojanje niza u kojemsukcesivne oglasivaôke poruke imaju pove-éavajuci uCinak niti da su troskovi oglasa-vanja nekim tvrtkama dozvolili da stvore tr-zisne prepreke.

Nesto recentnije, McAlister, Srinivasan iKim (2007) stupnjuju troskove oglasavanja iistrazivanja i razvoja prema prodaji, te na-laze da oni kod tvrtki umanjuju sistemskerizike, sto pak umanjuje trosak kapitala ipoboljsava vrijednost firme. Oni ukljuôujupodatke o 644 javno izlistane tvrtke u peri-odu izmedu 1979. i 2001. godine. Singh,Faircloth i Nejadmalayeri (2005) izvjesta-vaju 0 znaCajnom negativnom odnosu iz-medu oglasavanja tvrtke i sistemskih rizikana uzorku najboljih tvrtki iz baze podatakaStern-Stewart u periodu izmedu 1998. i2001. godine. Poveéani troskovi oglasava-nja povezani su s nizim sistemskim rizi-cima.

Nelson (1970) je bio prvi koji je tvrdioda ponovljeno kupovanje vec iskusane robe(gdje se kvaiiteta prepoznaje tek nakon ku-povine i upotrebe) moze stvoriti razliCitepovrate oglasivanju za razliôite kvalitete.Kod Nelsonovog modela oglasavanja jed-nako povecava poôetnu prodaju kod svihmarki, ali kasnije vise poveóava ponovnukupnju kod visokokvalitetnih marki. Stogaje poöetna prodaja, ceteris parihus, vrjednijatvrtkama s visoko kvalitetnim proizvodima,a te su tvrtke i spremne uloziti u ogla-savanje. Ovime se stvara temelj za pozitivnukorelaciju kvalitete i net pogodnosti kojedonosi oglasavanje.

Lavidge i Steiner (1961) postuliraju hije-rarhijski niz utjecaja poCevsi sa svjesnoscii0 oglasivanju: napredovanje kroz svjesnost,sklonost, uvjerenje i namjeru. Prema Butter-fieldu i drugima (1998), njihov nastup jeprecjzan izraz misljenja koja su dugo vre-

incur diminishing returns. Thus, the empiricalevidence in the industrial organization field ofeconomics shows no support to the notion thatadvertising increases minimum company size,either in general or in any particular industry.No direct evidence has been provided by time-series studies. Also researchers like Schmalen-see believe that there is no reason to suspectthe existence of a range in which successiveadvertising messages have increasing effectsand that advertising outlays have permittedsome firms to create barriers to entry.

More recently, McAlister, Srinivasan, andKim (2007) scale the fimi's advertising andR&D expenditures by its sales and find thatthey reduce the firm's systematic risk. This inturn tempers the cost of capital and enhancesfirm value. They include panel data on 644publicly traded firms between 1979 and 2001.Singh, Faircloth and Nejadmalayeri (2005) re-port a significant negative relationship betweena firm's advertising and systematic risk for asample of best performing firms from theStern-Stewart database for the period between1998 and 2001. Greater advertising expendi-tures are associated with lower systematic risk.

Nelson (1970) was the first to argue thatrepeat purchases of an experience good (wherequality is learned only after purchase and use)can create different returns to advertising fordifferent qualities. In Nelson's model, adver-tising increases the initial sales of all brandsequally, but later it increases repeat purchasesof high-quality brands more. Thus an initialsale is, ceteris paribus, more valuable to firmswith a high-quality product, and they are will-ing to spend on advertising. This provides thebasis for the positive con"elation of quality withthe net benefits of advertising.

.J..avidge and Steiner (1961) postulated a hi-erarchical sequence of effects beginning withawareness of advertising: proceeding throughknowledge, preference, conviction, and inten-tion. Their approach is a precise expression ofviews that have been held widely for manyyears in advertising circles, according to

Y. N. Bhagwat, M. DeBruine: Uspjeänost oglaäavanja u hotelskoj i turistiCkoj industriji 205

mena bila prisutna u oglasivaékim krugo-vima. Problem kod gore navedene i sliönihstudija jest mogucnost odredivanja isprav-nih modela odnosa oglasavanja i prodaje, ada se u potpunosti ne objasne detaiji hijerar-hije psiholoskih stanja koja opisuju prijelazod saznanja do konacne odluke.

Djelotvorrtost oglasavanja uhotelskoj i turistickoj industriji

Djelotvornost turistiökog oglasavanjamjeri se koristenjem upitnika za pracenjasvjesnosti imidza, promjena, odnosa i kona-ôna namjera putovanja. Prema Turou iDryju (1993), najöesce prouöavanje marke-tinske procjene bazira se na istrazivanjukonverzije. Konverzijske studije mjere udioosoba koje su imale upit o turistickoj desti-naciji te su je uistinu i posjetili. Butterfield idrugi (1988) opisuju mnoge ekonometrijskemodele naöinjene kako bi se objasnila pot-raznja za medunarodnim turizmom, s potra-znjom izrazenorn brojem turista ili kroz tu-ristiCku potrosnju (Witt 1980; Loeb 1982;Stronge i Redman, 1982; Witt i Martin,1987;Kliman, 1981).

Witt i Martin (1987) nalaze da je proci-jenjena elastiCnost potraznje za odmorom ustranoj zemlji obiCno znatno jaéa u podat-cima iz Velike Britanije nego iz NjemaCke.Ovo moze implicirati da su Britanci sklonijismatrati odmor u inozemstvu "luksuzom"dok ga Nijemci vise smatraju "potrebom".Takoder opazaju kako se pomak zavisne va-rijable pojavljuje samo u jednom modelu zapodatke iz Njemaöke, ali i kako se za po-datke iz Velike Britanije pomaci zavisne va-rijable pojavijuju u öak 25 modela. Ovomoze implicirati da upornost navike igrapuno vazniju ulogu u Velikoj Britaniji negou Njemaökoj. Autori sugeriraju da se po-boljsanja kod empirijskih rezultata mogupostici dodatnim poboljsanjem predstavlje-nih modela. Mi vjerujemo da bi rekonstruk-cija varijabli za procjenu potraznje upora-bom prihoda tvrtki i njihovog operativnogprihoda koristeci rezultirajuce mjere elastiC-

Butterfield et al. (1998). At issue in the aboveand similar studies is whether it is possible tospecify correct models of the advertising-salesrelationship without fully accounting for thedetails of the hierarchy of psychological statesthat describe the transition from knowledge tocommitment.

Advertising Effectiveness in the Hospi-tality and Tourism Industry

The effectiveness of tourism advertisinghas been measured by using tracking surveys tomonitor awareness, recall, image, changes, at-titudes, and travel intentions. Inquiry conver-sion research is the most common marketingassessment study, according to Turco and Dry(1993). The conversion studies measure theproportion of those persons who inquired abouta tourism destination that have become actualvisitors to the area. Butterfield et. al (1988) de-scribe many studies in which econometricmodels have been constructed to explain de-mand for international tourism, with demandexpressed in number of tourists or in terms oftourist expenditures (Witt 1980; Loeb, 1982;Stronge and Redman, 1982; Witt and Martin,1987; Kliman, 1981).

Witt and Martin (1987) find the estimatedincome elasticity for demand for foreign holi-days is usually considerably higher for U.K.-originated data than for Germany-originateddata. This could imply that the British are morelikely to consider foreign holidays as "luxuiies"whereas Germans are more likely to regardthem as "necessities." They also find that thelagged dependent variable appears only in oneof the models for Germany-originated data butin 25 of the models for U.K-originated data.This could imply that habit persistence plays amuch more important role in the U.K than inGermany. Tliey suggest that improvements inthe empirical results may be effected by furtherrefinements of the models presented. We be-lieve that reconstruction of variables to esti-mate demand by using revenues of corpora-tions and their operating income using the re-

206 Acta turistica. Vol 20 (2008), No 2, pp 145-254

nosti mogla pruziti uvid u razumijevanjeutjecaja oglasavanja na prihode tvrtki te im-plicitno na potraznju za uslugama koje nudihotelska i turistiöka industrija.

Barry i O'Hogan (1972) su stvorili log-linearne modele kako bi ispitali broj posjetai potrosnju britanskih turista u Irskoj u peri-odu od 1956. do 1969. godine. Uysal iCrompton (1984) su analizirali posjete i pot-rosnju stranih turista Turskoj iz glavnihemitivnih trzista. U sliénom pokusaju Papa-dopulos i Witt (1985) su ispitivali dolaskestranih turista u Gröku tijekom perioda1972. - 1982. Caí (1998) je ispitivao utje-caje metoda ispitivanja na financijske pov-rate jednog oglasivaökog programa u desti-naciji na ameriökom jugozapadu. Financij-ski se povrati mjere individualnom i gtup-nom potrosnjom gostiju o kojoj se izvjes-cuje u istrazivackim instrumentima.

Geoffrey Couch (1994) navodi kako jeveliki broj empirijskih studija pokusao os-vijetliti utjecaj cijene na potraznju u medu-narodnom turizmu, ali s razliCitim rezulta-tima. U nekim je studijima potraznja za me-dunarodnim turizmom bila vrlo neelasticnadok su ostale studije pokazale nisku elastic-nost. Prvo, Couch nalazi broj ne razlike uspecifikaciji modela (npr. eksplanatorne va-rijable ukljucene u model i njihove defini-cije). Drugo, karakteristike okolisa (npr. pe-riod vremenskih podataka, zemlje porijeklai destinacija) znatno se razlikuju. Trece, ka-rakteristike podataka razlikuju se u struk-turi, formi i vremenskim intervalima. Kona-ôno, metoda procjene koja se koristi za mje-renje elastiönosti mijenjala se od studije dostudije. Vecina studija specificirala je mo-dele linéame regresije u obliku koji mijetijanezavisnu i zavisnu varijablu uzimajuéi lo-garitme, jer rezultirajuci regresivni koefici-jenti daju direktnu procjenu pojedinih elas-tiCnosti potraznje.

Butterfield i drugi (1998) grupiraju pro-blème u mjerenju oglasivaöke djelotvornostiu sljedeée cetiri glavne klasifikacije: detaljniopis mjerenja uöinaka oglasavanja, prikup-

sultant elasticity measures will provide insightsinto understanding the impact of advertising onfirm incomes and implicitly the demand forservices offered by the hospitality and tourismindustry.

Barry and O'Hogan (1972) constructedlog-linear models to examine the number ofvisits and expenditures by British tourists inIreland in the period from 1956 to 1969. Uysaland Crompton (1984) analyzed foreign touristvisits and expenditures from its main sourcecountries in Turkey. Papadopoulos and Witt(1985) examined foreign tourist arrivals inGreece during the period from 1972 to 1982 ina similar attempt. Cai (1998) examined the ef-fects of inquiring methods on the financial re-turns of an advertising program in a SouthwestUS destination. The financial returns are meas-ured by the expenditures by visitors as indi-viduals or groups reported in survey in-struments.

Geoffrey Couch (1994) states that a largenumber of empirical studies have attempted toelucidate the effect of price on demand for in-ternational tourism with varying results. Insome studies the demand for internationaltourism was found to be highly inelastic andothers studies showed low elasticities. First, hefinds numerous differences in model specifica-tion (e.g. explanatory variables included in themodel and their definitions). Second, environ-mental characteristics (e.g. the data time pe-riod, countries of origin and destination) differsubstantially. Third, data characteristics varyin tenus of structure, form, and time interval.Finally, the estimation tnethod used to measureelasticities changed from study to study. Themajority of the studies specified linear regres-sion models in a form that transforms the de-pendent and independent variable by takinglogarithms because the resulting regression co-efficients provide direct estimates of the re-spective demand elasticities.

Butterfield et. al (1998) group the problemsin measuring advertising effectiveness in thefollowing four major classifications: specifica-

Y. N. Bhagwat, M. DeBruine: Uspjesnost oglaäavanja u hotelskoj i turistiikoj industriji 207

ljanje prikladnih podataka, razvoj ispravnoganalitiökog okvira te razvoj prikladnih sta-tistickih procedura za procjenu modela. Vje-rujemo da problem koji su gore izloziliButterfield i drugi (1998) proizlazi iz kvali-tativne specifikacije mjerenja oglasivaökedjelotvomosti. Mi postuliramo drugacijuzamjenu za mjerenje uspjesnöstl oglasava-nja, a to su individualni troskovi u turistiö-koj destinaciji ili prihodi za tvrtke koje dje-luju u hotelskoj i turistickoj industriji.

Vjerujemo da se djelotvornost oglasava-nja moze posredno mjeriti uzimajuci u obzirpovecanje prodajnih prihoda i povecanjeoperativnih prihoda. Utvrdivanje povezniceizmedu prihoda, operativne zarade i oglasa-vanja obuhvaca promjene koje se u meduv-remenu dogadaju u slijedu svjesnost, sklo-nost, osobita sklonost, uvjerenost i konacnaodluka. KonaCni ein kupnje ukljucuje trosakkupcu/korisniku, sto je odgovor na oglasi-vaCke napore. Uspjesnost napora moze sepouzdano mjeriti dolarski denominiranimmjerama kao sto su prihodi i operativna za-rada. Nas pristup koristi log-lineami eko-nometrijski model i mjeri elasticnost zaradekod ulaganja oglasavanjem na razini kom-panije. Podatci na razini kompanije su pou-zdano dostupni jer tvrtke prikupljaju i pub-liciraju ove podatke kako bi zadovoljile re-gulatome zahtjeve. Konacno, .mjere elasti-Cnosti ce isto tako moci potvrditi rezultatekoji su dobiveni proucavanjima odnosa iz-medu sistematskog rizika i oglasavanja.

3. TEORETSKI MODEL

Oglasavanje je znacajan pokretaö pro-daje i profita u turistickom sektoru. U ovomse ôlanku istrazuje odnos izmedu objavlje-nih podataka kompanija o troskovima ogla-savanja, prodaji i operativnoj zaradi koris-teci model ucinka utjecaja koji su Bhagwat idrugi (2004) prosirili kako bi istrazivali em-pirijski odnos izmedu troskova oglasavanja iprodaje. DAL na prodaju mjeri elasticnostprihoda od oglasavanja (A) - postotak

tion of measuring advertising effectiveness, ac-quisition of appropriate data, development of acorrect framework for analysis, and develop-ment of suitable statistical procedures for theestimation of the model. We believe that theproblems stated by Butterfield et al (1998)above emanate from the qualitative specifica-tion of measuring advertising effectiveness. Wepostulate a different proxy for the measurementof advertising success: expenditures by indi-viduals at tourist destinations or the revenuesfor the companies operating in the hospitalityand tourism industry.

We believe that advertising effectivenesscan be measured hy the following two proxies:increases in a company's Sales Revenues andincreases in its Operating Earnings. Establish-ing a nexus between revenues, operating earn-ings, and advertising subsumes interveningchanges in the sequence of awareness, liking,preference, conviction, and commitment. Thefinal act of consumption involves a cost to thebuyer/user which is a response to the advertis-ing effort. The success of the efibrt can reliablybe measured by dollar denominated measuressuch as revenues and operating eai"nings. Ourapproach uses the log-linear econometric tech-nique and measures the earnings elasticity ofadvertising investments at the company level.Data at the company level are reliably availableas companies compile and disseminate thesedata to the public in order to satisfy regulatoryrequirements. Finally, the elasticity measureswill also be able to confinn the results obtainedby the systematic risk-advertising relationshipstudies.

III. THEORETICAL MODEL

Advertising is a significant driver of salesand profits in the tourism sector. This paperexplores the relationship between a company'sreported Advertising Expenditures, Sales, andOperating Earnings using a leverage modelextended by Bhagwat et al. (2004) to investi-gate the empirical relationship between adver-

208 Acta turistica, Vol 20 (2008), No 2, pp 145-254

promjene u prodaji uzrokovan postotnompromjetiom u troskovima oglasavanja.

DAL na Prodaju = %AProdaja / %AA ( 1 )

sto se moze ponovno napisati kao

DAL na Prodaju = AProdaja x ôlnProdaja /ôProdaja - AA x ôlnAE/aA

(2)

te reducirati na

DAL na Prodaju = ôlnProdaja / ôlnA. (3a)

Konacno, jednadzba (3a) moze se tran-sformirati u

lnProdaja = a + ßlnA

Stoga, koeficijent smjera u jednadzbi(4a) predstavlja DAL na prodaju ili elastiÈ-nost prodaje kod oglasavanja.

Isto tako DAL na zaradu mjeri elastic-nost zarade od oglasavanja - postotnupromjenu u operativnoj dobiti prije oglasa-vanja i oporezivanja prouzroCenu postotnompromjenom u oglasivackim troskovima (A).

DAL na Zaradu = SlnOIBAT / 51nA. (3b)

Kao i prethodno jednadzba (3b) moze setransformirati u

inOIBAT = a + ßlnA (4b)

s koeñcijentom smjera u jednadzbi (4b)koja predstavlja DAL na zaradu ili elastiíS-nost zarade kod oglasavanja.

UsredotoCenje na utjecaj oglasivaökihtroskova na operativne prohode prije ogla-savanja (i poreza) u skladu je s uvjerenjemda je oglasavanje ulaganje koje ce generiralipovecanje buduée prodaje i zarade. Premageneralno prihvaéenim raCunovodstvenimprincipima, ameriöke tvrtke moraju otpisatioglasivaéke troskove kako su naöinjeni - tj.odbiti od tekuóih prihoda od prodaje -premda odredeni trosak moze odnositi navise vremenskih perioda. Trenutno otpisiva-nje je potrebno zbog nemogucnosti da se

tising expenditures and sales. The Degree ofAdvertising Leverage (DAL) on Sales meas-ures the earnings elasticity of advertising (A) -the percentage change in sales caused by a per-centage change in advertising expenditures.

DAL on Sales = %ASales / %AA ( 1 )

which can be rewiitten as

DAL on Sales == ASales x ôlnSales / ôSales -f AA x d\nAEJôA

(2)and reduced to

DAL on Sales = SlnSales / ôlnA. (3a)

Finally, Equation (3a) can be transformed(4a) to

lnSales = a -i- ßlnA (4a)

Thus, the slope in Equation (4a) representsthe DAL on Sales or the sales elasticity of ad-vertising.

Similarly, the DAL on Earnings measuresthe earnings elasticity of advertising - the per-centage change in Operating Income beforeAdvertising and Taxes (OIBAT) caused by apercentage change in Advertising Expenditures(A).DAL on Earnings = ôlnOIBAT / ölnA. (3b)

As before. Equation (3b) can be trans-formed to

lnOIBAT = a -t- ßlnA (4b)

with the slope in Equation (4b) representing theDAL on Earnings or the earnings elasticity ofadvertising.

Focusing on the effect of advertising ex-penditures on operating income before adver-tising (and taxes) is consistent with the beliefthat advertising is an investment that will gen-erate increases in future sales and future earn-ings. According to generally accepted ac-counting principles, U.S. companies must ex-pense advertising expenditures as incurred -i.e., subtract it from current sales revenues -even though the particular expenditure mightbenefit multiple periods. Immediate expensing

Y. N. Bhagwat, M. DeBruine: Uspjesnost oglaäavanja u hotelskoj i turistiCkoj industriji 209

pouzdano povezu troskovi s anticipiranombuducom prodajom u vrijeme kada se ula-ganje dogada. Pravilni tretman ulaganja uoglasivaôke aktivnosti je vjerojatno negdjeizmedu ova dva pristupa. Primjenjujucikonzervativniji pristup izmjerili bismo pos-totnu promjenu operativnog prihoda nakonoglasavanja uvjetovanu postotnotn promje-nom troskova oglasavanja (A), kao sto jesadrzano u nize navedenim dvijema jed-nadzbama:

DAL na Zaradu = ôlnOI / ôlnA. (3c)

Kao i prije, jednadzba (3c) moze se tran-sformirati u

lnOI = a + ßlnA (4c)

OCekuje se da ée koristenje jednadzbe(4c) radije nego jednadzbe (4b) dati rezul-tate sliCnog smjera. Medutim, buduci da setroskovi oglasavanja oduzimaju od opera-tivne zarade prije oglasavanja, alternativnaée formulacija uvesti vise brojki negativnezarade a koji ée rezultirati uklanjanjem opa-zanja iz cjelokupnog sklopa.

4. PODACI, METODOLOGIJA IREZULTATI

Deskriptivna statistika

Ova je studija provedena kodstenjempodataka koje su prikupili Standard andPoor's COMPUSTAT za period od 10 go-dina sa zavrsetkom u 2006. godini. Podacisu ukljuöivali godisnju prodaju, operativnuzaradu i troskove oglasavanja na godisnjojbazi. Tabela I pokazuje grupiranja koja seodnose na industrije koje su povezane s tu-rizmom - hoteli, kockarnice, krstarenja i tr-kaôe staze - ukupno 23 tvrtke. Podaci kojinedostaju odgovorni su za gotovo sva opa-zanja koja nedostaju. Podaci nisu prilago-deni inflaciji, a oglasivaöki intenzitet défi-nira se kao odnos izmedu oglasivackih tros-kova i prodaje.

is required because of the inability to reliablyrelate the expenditures with anticipated futuresales at the time the investment is made. Theproper treatment of investments in advertising-related activities is probably somewhere inbetween these two approaches. Applyitig themore conservative approach here would meas-ure the percentage change in Operating IncomeAfter Advertising (01) caused by a percentagechange in Advertising Expenditures (A), ascaptured by the following alternate equation:

DAL on Earnings = 91nOI / ôlnA. (3c)

As before. Equation (3c) can be trans-formed to

lnOI = a + ßlnA (4c)

Using Equation (4c) rather than Equation(4b) is expected to provide similar directionalresults. However, as advertising expendituresare subtracted from Operating Income BeforeAdvertising, the alternative formulation willintroduce more negative earnings numbers re-sulting in the removal of observations from thetotal set.

IV. DATA, METHODOLOGYAND RESULTS

Descriptive Statistics

This study was conducted using data com-piled by Standard and Poor's COMPUSTATServices for the 10-year period ending in 2006.Data included annual Sales, Operating Earn-ings, and Advertising Expenditures on an an-nual basis. Exhibit I shows tourism-relatedindustry groupings - hotels, casinos, cruises,and speed tracks - 23 companies in all. Miss-ing advertising data are responsible for almostall missing observations. The data are not in-flation adjusted, and Advertising intensity isdefined as the ratio of Advertising Expendi-tures to Sales.

210 Acta turistica. Vol 20 (2008), No 2. pp 145-254

Tabtica I Distribucija troskova oglasavanja, operativni prihod i prodaja

Operatori

Odabrane industrije povezane s turizmom4-cifra Broj Operativni

SIC tvrtki Oglasavanje Prihod ProdajaIntenzitet

oglasavanjaHoteliKockarniceKrstarenjaPrkaöe stazeUkupno

7011799044007948

41133

23

56282111056

146210770124269

1,0741,2174,239379

1,434

0.11380.02550.05000.02930.0448

Exhibit I Distribution of Advertising Expenditures, Operating Income, and Sates

Select tourism-related industries

Industry operatorsHotelsCasinosCruisesSpeed tracksOverall

4-digitSIC7011799044007948

#ofCompanies

41133

23

Advertising5628

2111056

Operatingincome

146210770124269

Sales1,0741,2174,2393791,434

.'AdvertisingIntensity0.11380.02550.05000.02930.0448

Tablica ilustrira siroku distribuciju ogla-sivaökih troskova i oglasivackog intenzitetamedu razliCitim grupacijama. Tvrtke kojeorganiziraju krstarenja trose na oglasavanjevise od drugih u grupaciji - 211 milijuna $ili oko 280% vise od prvog sljedeceg potro-saCa - hotelijera. Medutim, oglasivaôki in-tenzitet iz ove tablice pokazuje da hotelijeriu prosjeku trose svoje prodajne prihode naoglasavanje vise od svih drugih grupaeija.

Metodologija i rezultati

Ova studija koristi medu-sektorski reg-resijski model (xtreg) STATA kako bi seprocijenio konstantni clan i koeficijentsmjera u nize navedenom log-linearnommodelu, te utvrduje odnos izmedu troskovaoglasavanja (A) i prodaje (nakon eliminacijesvih negativnih opazanja operativnog pri-hoda):

ln(Prodaja¡|) = a + ¡ + e¡za tvrtku i u periodu j (5)

The table illustrates a wide distribution ofadvertising expenditures and Advertising in-tensity among the different groupings. Cruiseship companies outspent every other groupingon Advertising - $211 million or about 280%more than the next highest spenders - Hoteloperators. However, the Advertising Intensitiesreported in this table show that - on average -Hotels spend more of their sales dollars on ad-vertising than any ofthe other groupings.

Methodology and Results

This study employs STATA's cross-sec-tional regression model (xtreg) to estimate theintercept and slopes in the following log-linearmodel establishing the relationship betweenAdvertising Expenditures (A) and Sales (aftereliminating all non-positive Operating Incomeobservations):

ln(SaleSij) = a + P(lnA¡j) + [ij + 8jfor company i in period j (5)

Y. N. Bhagwat. M. DeBruine: Uspjesnost oglasavanja u hotelskoj i turisliCkoj industriji 211

Koeficijent stnjera ß mjeri elasticnostzarade oglasavanja, nazvane DAL na pro-daju. Procjenjujemo koeficijent smjera zasva prihvatljiva opazanja za hotele, kockar-nice, krstarenja i trkace staze.

Tabela II pokazuje rezultate medusekcij-ske regresije oglasavanja kod prodaje. Uku-pno, 1%-tno povecanje u ogiasivanju rezul-tira povecanjem prodaje od 0,81 %.

The slope ß measures the earnings elastic-ity of advertising, coined the Degree of Adver-tising Leverage on Sales (DAL on Sales). Weestimate the slope for all eligible observationsfor hotels, casinos, cruises, and speed tracks.

Exhibit II shows the results of the cross-sectional regression of advertising on sales.Overall, a 1% increase in advertising results ina .81 % increase in sales.

Tablica II Utjecaj troskova oglasavanja na prodaju

Odabrane turisticke industrije

OperatoriHoteliKockarniceKrstarenjaTrkaCe stazeUkupno

4-cifraSIC7011799044007948

Brojpromatranja

27112624170

Sjeciste(t-stat)

2.91 (13.3)4.11 (24.7)3.27 (7.33)4.03 (20.4)3.93(33.1)

Oglasavanje(t-stat)

0.84(13.9)0.88(11.9)0.94(11.1)

0.79 (8.79)0.81 (19.2)

UkupnoR'-

0.72380.84510.83540.75890.8018

F

194.25141.45122.7577.31366.88

Exhibit II Effects of Advertising Expenditures on Sales

Select tourism-related industries

Industry operatorsHotelsCasinosCruisesSpeed tracksOverall

4-digitSIC

7011799044007948

#ofobservations

27112624170

Intercept(t-stat)

2.91 (13.3)4.11 (24.7)3.27 (7.33)4.03 (20.4)3.93(33.1)

Advertising(t-stat)

0.84(13.9)0.88(11.9)0.94(11.1)0.79 (8.79)0.81 (19.2)

OverallR2

0.72380.84510.83540.75890.8018

F

194.25141.45122.7577.31366.88

Rezultati DAL-a na prodaju razlikuju sepo industrijskim sektorima. Za svaku 1%-tnu promjenu u ogiasivanju, prodaja u hotel-skim kompanija je skocila za 0,84% dok jekod kruznih brodskih putovanja i kockar-nica porasla za 0,88% i 0,94%.

Isti STAT program koristili smo kako biprocijenili sjecista i kosine odnosa izmedutroskova oglasavanja (A) i operativnog pri-hoda prije oglasavanja i oporezivanja, sto jepokazano u sljedecoj jednadzhi:

za tvrtku i u periodu j (6)

The DAL on Sales results differ among in-dustry sectors. For every 1% change in adver-tising, the sales for hotel companies rose by.84%, while the sales for cruise ship operatorsand casinos rose by .88% and .94%, respec-tively.

We used the same STATA program to es-timate the intercepts and slopes for the rela-tionship between advertising expenditures (A)and operating income before advertising andtaxes (OIBAT), as represented by the follow-ing equation:

ln(OIBATij) = a + ß(lnAij) -i- i¡ -i- Sj 'for company i in period j (6)

212 Acta turistica. Vol 20 (2008), No 2, pp 145-254

Tabela III pokazuje rezultate medusek-torske regresije oglasavanja na zaradu.Ukupno, 1%-tno poveéanje oglasavanja re-zultira 0,81% povecanjem prihoda prije og-lasavanja i oporezivanja.

Exhibit III shows the results of the cross-sectional regression of advertising on earnings.Overall, a 1% increase in advertising results ina .81% increase in earnings before advertisingand taxes.

Tabtica III Utjecaj ogtasavanja na operativni prihod prije ogtasavanja

Odabrane SIC industrije

Operatori

HoteliKockamiceKrstarenjaTrkaöe stazeUkupno

4-cifraSIC

7011799044007948

#Opazanja

27112624170

Sjeciste(t-stat)

1.19(2.85)2.34 (8.32)2.22 (6.72)2.92 (9.27)2.26(11.7)

Oglasavanje(t-stat)

0.91 (7.86)0.87 (6.92)0.87(13.9)0.76 (5.28)0.81 (11.8)

Ukupno

0.89570.79880.78340.66850.7967

F

61.7847.85194.4!27.92139.01

Exhibit III Effects of Advertising Expenditures on Operating Income Before Advertising

Select SIC industries4-digit # of Intercept Advertising Overall

Industry operatorsHotelsCasinosCruisesSpeed tracksOverall

SIC7011799044007948

observations27772624170

(t-stat)1.19(2.85)2.34 (8.32)2.22 (6.72)2.92 (9.27)2.26(11.7)

(t-stat)0.91 (7.86)0.87 (6.92)0.87(13.9)0.76 (5.28)0.81 (11.8)

R20.89570.79880.78340.66850.7967

F61.7847.85194.4127.92139.01

Rezultati DAL-a na zaradu takoder serazlikuju mecJu industrijskim sektorima. Zasvaku 1%-tnu promjenu ulaganja u ogiasa-vanje zarada za hotelske tvrtke poveéala seza 0,91%, dok se za organizatore kruznihbrodskih putovanja i kockamice podigia za0,87%. Konaöno, 1%-tna promjena u ulaga-nju u oglasavanje povecala je zaradu trkac-kih staza za 0,79%.

Rezultati DAL-a na zaradu uglavnom sumanji kada se koristi operativni prihod (na-kon oglasavanja). Iznimka su kockamicegdje 1%-tno poveéanje ulaganja u oglasava-nje rezultira sa 0,89% porastom operativnogprihoda. Pretnda znaöajne, t-test veliCina zakoeficijent i R2 i F-test veliíina za ovajmodel manje su nego prije.

The DAL on Earnings results also differamong industry sectors. For every 1 % changein investment in advertising, the eamings forhotel companies rose by .91%, while the salesfor cruise ship operators and casinos rose by.87%. Finally, a 1% change in investment inadvertising increased the eamings of Speedtrack companies by .79%.

The DAL on Eamings results are mostlysmaller when using operating income (afteradvertising). The exception is the Casinosgroup where a 1 % increase in advertising re-sults in a .89% increase in operating income.Although significant, the t-stat for the coeffi-cients and the R2 and F-statistic for this modelaie all lower than before.

Y. N. Bhagwat, M. DeBruine; Uspjesnost oglasavanja u hotelskoj i turistiikoj industriji 213

Tabtica IV Utjecaj trostcova oglasavanja na operativni prihod nakon ogtasavanja

Birane industrije povezane s turizmom

Operatori

HoteliKockarniceKrstarenjaTrkaCe stazeUkupno

4-cifreSIC

7011799044007948

#opazanja

27112624170

Sjeciste(t-stat)

0.82 (0.77)2.11 (5.53)2.28 (4.90)2.94(6.51)2.09 (7.46)

Oglasavanje(t-stat)

0.81 (2.75)0.89 (5.23)0.81 (9.20)0.69 (3.35)0.78 (7.80)

UkupnoR

0.78290.74200.68090.57950.6972

F

7.5727.3884.6211.1960.76

Exhibit IV Effects of Advertising Expenditures on Operating Income After Advertising

Select tourism-related industries

Industry operatorsHotelsCasinosCruisesSpeed tracksOverall

4-digitSIC7011 •799044007948

#ofobservations

27112624170

Intercept(t-stat)

0.82 (0.77)2.11 (5.53)2.28 (4.90)2.94(6.51)2.09 (7.46)

Advertising(t-stat)

0.81 (2.75)0.89 (5.23)0.81 (9.20)0.69 (3.35)0.78 (7.80)

OverallR2

0.78290.74200.68090.57950.6972

F7.57

27.3884.6211.1960.76

Rasprava o rezultatima

Odnos dobiven od DAL-a na zaradusvake industrije prema DAL-u na prodajudaje dodatni uvid kako DAL-ovi mogu utje-cati na strategiju. Mjere uspjesnosti kao stosu profitna marza i povrat na ulaganje, bitnoutjeCu kod modela vrednovanja baziranih narezidualnoj vrijednosti ili abnormalnomrastu zarada (Penman, 2007; Palepu i Healy,2008). Utjecaj oglasivaCkih troskova naprodaju i zaradu oslikava odnos izmeduDAL-a na zaradu i DAL-u na prodaju (DALodnos). Kao takav, DAL odnos pokazujekako dodatni dolar ulaganja u oglasavanjeutjeôe na tekucu profitnu marzu. DAL od-nos veci od 1 implicira da dodatno ulaganjeu oglasavanje povecava trenutnu profitnumarzu dok DAL manji od 1 podrazumijevaobratnu situaciju. Od racionalnih se tvrtkioCekuje maksimiziranje profitne marze i in-vestiranje u oglasavanje do toôke kada dalj-nje ulaganje smanjuje ocekivani povrat.

Discussion of Results

A ratio constructed from each industry'sDAL on Earnings to its DAL on Sales providesfurther insight in how DALs can influencestrategy. Performance measures such as profitmargin and return on investments factor deci-sively in valuation models based on residualvalue or abnormal earnings growth (Penman,2007; Palepu and Healy, 2008). The effect ofadvertising expenditures on sales and earningsis captured by the ratio of DAL on Earnings toDAL on Sales (the DAL Ratio). As such, theDAL Ratio provides insight on how an addi-tional dollar of advertising investment impactsthe company's profit margin. A DAL Ratiogreater than 1 implies that an additional in-vestment in advertising increases the cuiTentprofit margin, while a DAL Ratio less than 1implies the opposite. Rational companies areexpected to maximize profit margins and investin advertising up to the point that further in-vestment diminishes expected returns.

214 Acta turistica. Vol 20 (2008), No 2, pp 145-254

Investitori takoder prate rast zarade -rast buducih zarada je vazna odrednica vri-jednosti tvrtke - i Cesto ga usporeduju sa ra-stom prodaje. Investitori nisu skloni promat-rati samo rast zarade, jer tvrtka moze rastibez stvaranja dodatne vrijednosti. Na prim-jer, tvrtka moze poveéati djelovanje (i za-radu) kupovanjem konkurentnog poduzeca.Medutim, ako je uprava previse platila kup-ljenu tvrtku, onda dodatna zarada nece pre-masiti potrebni povrat i dioniCari u takvomposlu gube. Rast zarada koji prelazi rastprodaje signalizira ustede - mozda zbogekonomije razmjera. S druge strane, rast za-rade koji kaska za rastom prodaje signaliziratesku bitku u smislu strategije poduzeca dastvori dodatnu vrijednost kroz rast. DALodnosi mogu takoder igrati ulogu u promat-ranju djelotvornosti takve strategije. Zamis-limo sljedecu identicnost:

01, = (01,/Prodaja,) x Prodaja, = PM, xProdaja, (7)

gdje PM, predstavlja profitnu marzu u vri-jeme t. Dijeleci s istom jednadzbom zaprethodni period dobivamo

OI,/OI,.| = PM,/PM,., X Prodaja, /Prodaja,.,(8)

dopustimo sada da g* ' predstavlja rast za-rade. Zatim

Preslagivanje Clanova i zakljuCak da jeiblizno nula, u vecini situa-

cija pojednostavljtije jednadzbu (9) uPM01 _ gProdaja (10)

Rast zarada prelazi rast prodaje jedino iako je rast profitne marze pozitivan. Kao stosmo ranije objasnili, DAL odnos obuhvacautjecaj troskova oglasavanja na prodaju i za-radu putem odnosa DAL na zaradu premaDAL na prodaju. DAL odnos daje uvidkako dodatni dolar ulaganja u oglasavanjeutjece na profitnu marzu tvrtke. Tako, kao iranije, DAL odnos veci od 1 implieira da

Investors also monitor earnings growth -future earnings growth is an important deter-minant of company value - and frequentlycompare it to a company's sales growth. In-vestors are wary of looking at earnings growthexclusively because a company can growearnings without adding value. For example, acompany might increase operations (and earn-ings) by purchasing a competitor. However, ifmanagement paid too much for the acquiredcompany, then the added earnings will not ex-ceed the required return and its stockholderslost value in that deal. An earnings growth inexcess of sales growth signals efficiencies -perhaps ñ-om economies of scale. On the otherhand, an earnings growth lagging sales growthsignals an uphill battle in terms of a company'sstrategy of adding value through growth. DALRatios also can play a role in monitoring the ef-fectiveness of such a strategy. Consider thefollowing identity:

01, = (01,/SaleSt) x Sales, = PM, x Sales, (7)

where PM, stands for profit margin at time t.Dividing by the same equation for the prior pe-riod, we get

I = PM,/PM,., X Sales,/Sales,., (8)

Now let g°' represent the growth in earn-ings. Then

Re-aiTanging terms and realizing thatgSaies ^ gPM approximates zero in most settingssimplifies Equation (9) intogOI ^ gSales _ gPM ^JQ^

The growth in earnings exceeds the growthin sales if and only if the growth in profit mar-gin is positive. As explained earlier. The DALRatio captures the effect of advertising expen-ditures on sales and earnings by the ratio ofDAL on Earnings to DAL on Sales. The DALRatio provides insight on how an additionaldollar of advertising investment impacts thecompany's profit margin. Then, as before, a

Y. N. Bhagwat, M. DeBruine; Uspjeänost oglaäavanja u hotelskoj i turistiCkoj industriji 215

poveóano trosenje na ogiasavanje uzrokujerast zarade veci od rasta prodaje, dok DALodnos manji od 1 implicira da daljnji tros-kovi oglasavanja mogu prouzrociti kaskanjerasta zarade za rastom prodaje u spomenu-tom periodu.

DAL Ratio greater than 1 implies that spendingmore on advertising causes the earnings growthto exceed the sales growth, while a DAL Ratioless than 1 implies that further spending on ad-vertising would cause earnings growth to lagsales growth for the period.

Tablica V Utjecaj 10% povecanja oglasavanja na trenutne PM odnose

Birane industrije povezane s turizmomTrenutni Odnos % promjena

OperatoriHoteliKockarniceKrstarenjaTrkaCe stazeUkupno

odnos PM0.13600.17250.18160.32750.1876

DAL0.96431.01140.86170.87340.9630

u PM odnosu-0.28%0.09%-1.19%-0.93%-0.28%

Exhibit V Effect of a 10% increase in advertising on current PM ratios

Select tourism-related industriesIndustryoperatorsHotelsCasinosCruisesSpeed tracksOverall

CurrentPM ratio0.13600.17250.18160.32750.1876

DALRatio

0.96431.01140.86170.87340.9630

% changein PM ratio

-0.28%0.09%-1.19%-0.93%-0.28%

Jednostavno propitivanje odnosa DALdohivenog dijeljenjem DAL-a na zaradusvake industrije iz Tabele IV sa DAL-om naprodaju iz Tabele I pokazuje da hoteli ikockarnice imaju DAL odnos blizu 1, dokorganizatori kruznih putovanja i trkacihstaza imaju DAL odnos ispod 1. Iz ovih jepodataka jasno da se industdja ne treba ok-renuti povecanju ulaganja u ogiasavanjekako bi generirala rast zarade koji ce bitiveci od rasta prodaje. Ilustracije radi, pos-ljednja kolona u Tabeli VI kvantificira utje-caj 10%-tnog povecanja troskova oglasava-nja na odnose profitne marze u cijeloj indu-striji. Postotna promjena u PM odnosima uindustriji od 10% promjene u troskovimaulaganja oglasavanja raéuna se na sljedecinaéin:

A simple inspection of DAL Ratios con-structed by dividing each industry's DAL onEainings from Exhibit IV by its DAL on Salesfrom Exhibit I indicates that the hotel and ca-sino operators have DAL Ratios close to 1,while the cruise ship and speed track operatorshave DAL Ratios below 1. It is clear fromthese data that, as an industiy, none should turnto increasing advertising investments in an at-tempt to generate earnings gi-owth in excess ofsales growth. For illustrative purposes, the lastcolumn in Exhibit VI quantifies the effect of a10% increase in advertising expenditures onindustry-wide profit margin ratios. The per-centage change in the industry PM ratios of a10% change in advertising expenditures iscomputed as follows:

216 Acta turistica. Vol 20 (2008), No 2, pp 145-254

(1 + 10 xDAL na Zaradu)/( 1 + 10 X DAL na Prodaju) - 1

(11)

Sve u svemu, izgleda da efekt promjenena troskove oglasavanja ima samo manjiutjecaj na odnose profitne marze u indus-triji. Odgovor na pitanje je li utjecaj znatnijiza tvrtke unutar tih industrija zahtijeva veciskup podataka od onih koji su koristeni uovoj studiji.

5. ZAKLJUCCI

Studija je razvila i izmjerila elastiCnostoglasivaökih troskova (nazvanih stupanj ut-jecaja oglasavanja ili DAL) uporabom log-linearnog modela. Dobiveni rezultati za de-setogodisnji period od 1997. do 2006. go-dine pokazuju da, u prosjeku, 1%-tnapromjena u ogiasivanju rezultira u 0,81%promjenom u prodaji i 0,81% promjenom iu operativnom dohotku za sve tvrtke koje suukljuCene u studiju. Medutim, razliCiti ope-rateri u industriji bili su drukcije pogodeni,a daljnja analiza podatka podrzala je hipo-tezu kako su industrije s vecim intenzitetomoglasavanja takoder imale vécu elasticnostzarade kod oglasavanja.

Odnos DAL-a na zaradu prema DAL-una prodaju (DAL odnos) koristan je za pro-matranje utjecaja promjena ulaganja u ogla-savanje na protitnu marzu - popularnamjera koju ulagaCi pomno promatraju. Ma-tematiCki smo pokazali kako profitna marzatvrtke raste dodatnim ulaganjem u oglasa-vanje dok god je DAL odnos veéi od 1.Nasa analiza podataka pokazuje da hoteli ituristiCke tvrtke, kako su predstavljeni uovoj studiji, posluju na efikasnoj razini ula-ganja u oglasavanje i imaju malo razloga zapoveéanje trenutaCnih oglasivaCkih naporaradi poboljsanja poticatelja fínancijskihvrijednosti kao sto su profitna marza i pov-rat na imovinu.

(1 + 10 xDAL on Earnings)/(1 + 10 X DAL on Sales)-1 (11)

Overall, the effect of a change in advertis-ing expenditures appears to have only a slighteffect on the industry-wide profit margin ratios.Whether the effect is more pronounced forcompanies inside those industries requires alarger data set than the one utilized for thisstudy.

V. CONCLUSION

This study developed and measured theearnings elasticity of advertising expenditures(coined the degree of advertising leverage orDAL) using a log-linear model. The resultsobtained for the ten year period from 1997 -2006 indicate that - on average - a 1 % changein advertising results in a .81% change in salesand a .81% change in operating income for allcompanies included in the study. However, dif-ferent industry operators were affected differ-ently, and further analysis of the data supportedthe hypothesis that industries with a higher ad-vertising intensity also had a higher earningselasticity of advertising.

The ratio of DAL on Earnings to DAL onSales (the DAL Ratio) is useful for monitoringthe impact of changes of advertising invest-ments on profit margin - a popular measurethat is closely monitored by the investmentcommunity. We showed mathematically how acompany's profit margin increases from addi-tional investments in advertising as long as itsDAL Ratio is greater than 1. Our analysis ofthe data indicates that hotel and tourism indus-try operators, as represented in this study, ap-pear to operate at an effective level of ad-vertising-related investments and have littlereason to increase current advertising effortsfor the sake of enhancing financial valuationdrivers such as profit margin and rate of retumon assets.

Y. N. Bhagwat, M. DeBruine: Uspjesnost ogiasavanja u hotelskoj i luristiCkoj industriji 217

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