The role of destination contextual effects in driving the expenditure of tourists: a multilevel spatial modelling approach

Tourist's expenditure is a key variable for the tourism industry with a high presence in the literature. Recent micro-econometric approaches estimating the factors driving the expenditure of visitors do not confer much relevance to destination features, despite its relevance shown by the theoretical tourism literature. The present investigation proposes a novel framework in tourism demand studies, expanding the previous modelling approach, in order to take into account such contextual destination effects. Particularly, we define a two-level hierarchical spatial model that includes spatial effects, operating at both the level of the destination and the neighbouring clusters, accommodating in this way for a spatial local dependence structure in the spending choices of visitors. Empirical evidence on the performance of this modelling framework is obtained by building on a relevant dataset for more than 136,000 international visitors reaching 1872 destinations in Spain. This allows for a multi-destination analysis showing that the destination contextual and local neighbourhood effects could account up to 50% of the variance of the expenditure of tourists in the case of most popular destinations. However, such effects do not show this salient role in the case of less developed destinations. Policy recommendations emerging from the results of the investigation are discussed further.