Is visitors’ expenditure at destination influenced by weather conditions?

Abstract

Weather has been shown to affect consumption patterns by altering people’s moods. This paper examines the impact of atmospheric conditions on destination expenditure considering cruise passengers’ onshore expenditure as the case study. We exploit quasi-random variation in a set of hourly real-time weather indicators in a port of call, through the Tourism Climate Index (TCI) and the Physiologically Equivalent Temperature (PET), to draw inference about their effect on destination expenditure. Therefore, we capture the specific atmospheric conditions encountered by tourists, alleviating the usual aggregation bias in related studies. In particular, information about mean and maximum air temperature, wind speed, rainfall, sunshine duration and mean and minimum relative humidity is considered. We estimate a heteroskedastic Tobit model with an inverse hyperbolic sine transformation of the dependent variable that deals with problems of non-normality and extreme values. Controlling for several sociodemographic characteristics and cruise size, we find consistent evidence that pleasant weather (either using TCI or PET indexes) increases onshore expenditure. Our findings have important implications for destination management.