Valuation Methodology of return on investment for tourism promotion plans in outermost regions – Madeira Case Study

Abstract

In the case of the Outermost Islands, which are heavily dependent on tourism and are inherently heavily dependent on air and sea connections to the issuing markets, a systematic analysis of
the resources applied is imperative. Thus, this study developed a methodology for analyzing
the financial viability of the expected return on this investment, meeting the promotion plans prepared and in accordance with the supply and demand conditions. This methodology is based on the bibliographic review of the different financial models of investment valuation and the indicators referred to in the tourism promotion plans. In the case of the Autonomous Region of Madeira, given the importance of tourism, the proposed methodology aims to be one instrument for supporting decision, according to the Index of Promotion Profitability. With the application of the model it is possible to determine for the promotion plan in the study, a promotion profitability index of €44.31, higher than the historical promotion profitability index of €42.50.