The Economics of Tourism Destinations

Theory and Practice

Norbert Vanhove

• Publisher: Routledge
• Year: 2017
• Print ISBN: 9781138578791
• eBook ISBN: 9781351263788
• Edition: 3
• Topic: Business
• Subtopic: Hospitality, Travel & Tourism Industry
• Index: Business

The measurement of tourism, for example analysing competitiveness and evaluating tourism projects, is not an easy task. Now in its third edition, The Economics of Tourism Destinations: Theory and Practice provides a succinct guide to the economic aspects of tourism for students and practitioners alike to decipher the methods of measurement of supply, demand, trends and impacts. This new edition has been revised and updated to include:

• Three new chapters: Tourism as a development strategy, Tourism export-led growth, and a dedicated chapter on Macro-evaluation of tourism projects and events, including the travel cost method and the contingent valuation method.

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• New case studies from emerging destinations in Asia, Australia and America to show theory in practice.

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• New and updated data throughout.

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Each chapter combines theory and practice and is integrated with international case studies. Combining macro- and micro-aspects of economics to the tourism destination, this is an invaluable resource for students learning about this subject, as well as being aimed at tourism researchers and policy-makers.

Chapter 1
The economic characteristics of the tourism sector

The purpose of this first chapter is to focus on a number of economic characteristics of the tourism sector. These characteristics are fundamental to many aspects of the economics of tourism and they will be referred to throughout this book. However, before starting with an overview of the economic characteristics, it is important to define what we understand by ‘tourism’ and what do we not consider to be tourism.

What is tourism?

What is tourism? This is not such a simple question as it seems. Colloquially, free time, leisure, recreation, travel and tourism are used synonymously and are almost interchangeable. However, from a scientific and practical point of view, the reality is quite different. The case of Austria is a simple illustration. In 1999, based on the Tourism Satellite Account (TSA), tourism represented, in terms of value added (direct and indirect effect), 8.7 per cent of GDP (Gross Domestic Product). However, tourism and recreation together make up a total of 15.5 per cent of GDP (Franz et al., 2001). The difference is clear.

In the tourism literature, a distinction is made between conceptual and statistical (technical or operational) definitions of tourism.

Conceptual definitions

One of the oldest conceptual definitions of tourism was given by two pioneers of tourism research, Hunziker and Krapf (1942), who defined tourism as being ‘a sum of relations and phenomena resulting from travel and stay of non residents, in so far as a stay does not lead to permanent residence and is not connected with any permanent or temporary earning activity’. For a considerable time this definition was generally accepted – including by the AIEST (Association Internationale d’Experts Scientifiques du Tourisme) – although it had more than one shortcoming. For example, a stay in a hospital could be considered to be tourism, and a business trip would be excluded as being related to an earning activity. Moreover, under this definition non-residents were identified with foreigners – in other words, domestic tourism was totally excluded.

The AIEST discussed the definition once again on the occasion of their annual congress in Cardiff in 1981. This congress accepted the following definition: ‘The entirety of interrelations and phenomena which result from people travelling to and stopping at places which are neither their main continuous domiciles nor places of work either for leisure or in the context of business activities or study’.

A clearer definition can be found at the British Tourism Society, which in 1979 adopted a definition based upon the work of Burkart and Medlik (1974): ‘Tourism is deemed to include any activity concerned with the temporary short-term movement of people to destinations outside the places where they normally live and work, and their activities during the stay at these destinations’.

Within this definition we can identify the inclusion of those activities that are involved in the stay or visit to the destination. There is no insistence on overnight stays or foreign visits, and it allows for domestic as well as day visits (Gilbert, 1990).

According to Burkart and Medlik (1974) – and this still applies today – conceptually, tourism has five characteristics:

1. Tourism is an amalgam of phenomena and relationships rather than a single one.
2. These phenomena and relationships arise from a movement of people to, and a stay in, various destinations; there is a dynamic element (the journey) and a static element (the stay).
3. The journey and stay are to and in destinations outside the normal place of residence and work, so that tourism gives rise to activities which are distinct from those of the resident and working populations of the places through which tourists travel and of their destinations.
4. The movement to the destinations is of a temporary, short-term character.
5. Destinations are visited for purposes not connected to paid work – that is, not to take up employment.

A conceptual definition that deserves special attention is the one given by Gilbert (1990) and proposed for a social understanding of tourism: ‘Tourism is one part of recreation which involves travel to a less familiar destination or community, for a short-term period, in order to satisfy a consumer need for one or a combination of activities’.

The merits of this definition are several. It places tourism in the overall context of recreation; retains the need for travel outside the normal place of work habitation, and focusses on the reasons for travel.

Operational or technical definitions

The main practical need for exact definitions of tourism and the tourist has arisen from the necessity to establish adequate statistical standards (Mieczkowski, 1990). Furthermore, many people, including tourism experts, have difficulty in considering business trips and vocational travel as tourism activities. They are often included with tourism because they respond to the characteristics described in the preceding section, and their economic significance is also the same (see Burkart and Medlik, 1974). Business travellers are pure consumers, and it is difficult or impossible in practice to separate them from those travelling for pleasure. The main difference is purpose, but most hoteliers or accommodation providers are unable to make a distinction between holidaymakers and business travellers.

In the opinion of Burkart and Medlik (1974), a technical definition of tourism must:

• Identify the categories of travel and visits that are and are not included;
• Define the time element in terms of length of stay away from home (i.e. the minimum and maximum period);
• Recognize particular situations (e.g. transit traffic).

A well-known definition is the one recommended on the occasion of the United Nations Conference on Travel and Tourism held in Rome in 1963, although it should be recognized that the UN definition was not the first (see Committee of Statistical Experts of the League of Nations, ETC, IUOTO, OECD and IMF, in Gilbert, 1990). The UN Conference recommended the following definition of ‘visitor’ in international statistics: ‘For statistical purposes, the term visitor describes any person visiting a country other than that in which he has usual place of residence, for any reason other than following an occupation remunerated from within the country visited’. This definition covers:

• Tourists, i.e. temporary visitors staying at least 24 hours in the country visited and the purpose of whose journey can be classified under the headings of either (a) leisure (recreation, holiday, health, study, religion, and sport) or (b) business, family, mission, meeting.
• Excursionists, i.e. temporary visitors staying less than 24 hours in the country visited (including travellers on cruises).

The statistics should not include travellers who, in the legal sense, do not enter the country (for example, air travellers who do not leave an airport’s transit area, and similar cases).

Later, the phrase ‘24 hours’ became a point of discussion, and was replaced by ‘overnight’ (United Nations Statistical Commission of 1967 and the IUOTO (International Union of Official Travel Organizations) meeting of 1968, in Gilbert, 1990). This precision does correspond better to the reality (a trip with an overnight stay may last less than 24 hours), but is after all of minor importance.

The UN definition refers to international tourism (visiting a country other than that in which a traveller usually resides), but there is no reason to neglect domestic tourism. A person travelling from New York to California to visit the city of San Francisco (domestic tourism) is no less a tourist than is a Belgian visiting Paris (international tourism). The 1980 Manilla Declaration of the WTO (World Trade Organization) extends the definition implicitly to all tourism, both domestic and international. Excluded from the definition are returning residents, immigrants, migrants (temporary workers staying less than one year), commuters, soldiers, diplomats and transit passengers.

This was the standard definition for a long time, although it was not applied in all countries. In that respect, the USA is a typical example. Even within the USA the definition of tourism and tourists varies from state to state (De Brabander, 1992).

There was, however, still no common language of tourism statistics. Many scientists and organizations were aware of the problem, and the early 1990s saw a long period of discussion and negotiation, in which several international organizations participated (Eurostat, OECD, WTO and UN Statistic Division), in an attempt to solve it. The conclusion, in 2000, was the adoption by the United Nations Statistical Commission of the Tourism Satellite Account: Recommended Methodological Framework (Eurostat et al., 2001). The Vancouver Conference of 2001 was a celebration of ten years of scientific and intellectual international cooperation leading to a consensus on the development of the TSA. This remarkable achievement by the tourism industry was the culmination of the life’s work of the late Enzo Paci – the WTO’s former chief of statistics (see Enzo Paci World Conference on the Measurement of the Economic Impact of Tourism, Nice, 1999, in Eurostat et al., 2001). At the same time, it was a reformulation of a technical definition of tourism which was (or should have been) accepted worldwide:

Tourism comprises the activities of persons travelling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes not related to the exercise of an activity remunerated from within the place visited, where the persons referred to in the definition of tourism are termed ‘visitors’, a visitor being defined as: Any person travelling to a place other than that of his/her usual environment for less than twelve months and whose main purpose of trip is other than the exercise of an activity remunerated from within the place visited.

This definition differs in two respects from the former UN description: first, the maximum duration of stay (one consecutive year) outside the usual place of residence is determined; and secondly, ‘usual place of residence’ is replaced by the term ‘usual environment’.

In the new definition, ‘usual environment’ is a key element. In the Tourism Satellite Account: Recommended Methodological Framework (Eurostat et al., 2001), this corresponds to...

Table of contents

• Cover
• Title
• Copyright
• Dedication
• Contents
• List of figures
• List of tables
• Foreword
• Preface to the third edition
• Acknowledgements
• List of abbreviations
• 1 The economic characteristics of the tourism sector
• 2 Measuring tourism
• 3 Tourism demand
• 4 Tourism supply
• 5 Pricing and taxation
• 6 Competition and the tourism destination
• 7 Forecasting tourism demand
• 8 Tourism as a development strategy
• 9 Tourism export-led growth
• 10 The economic impact of tourism
• 11 Micro-evaluation of projects in the tourism and hospitality industry
• 12 Macro-evaluation of projects in the tourism and hospitality industry
• Index