Transcript FEEM PPT Template

Performance and strategy of
Cultural Tourism:
an economic point of view
Ugo Gasparino, Elena Bellini, Barbara Del Corpo,
William Malizia, Dino Pinelli
Luxembourg 21 | 09 | 2006
The ‘PICTURE’
 ‘Performance and strategy’ of Cultural Tourism
assessed at several levels:

–
–
–
Economic
–
–
–
–
Crowding and congestion
Community attitude
Taxes
…
Social and cultural
Environmental
balance an array of impacts that may positively or negatively
affect the local community and the other Stakeholders - possibly
redistribute the benefits
2
Direct benefits
DIRECT
Expenditures by
Tourists and Travelers
'Tourism Industries'
Hotels, Restaurants,
Theaters, Stores, etc.
3
Direct effects on sales
Direct benefit
548 €
Tourism in Syracuse,
impact on Sicilian
economy
4
Indirect benefits
Imports
Payments for
Supplies and
services
SUPPLIERS
to 'Tourism Industries'
• Agriculture
• Manufacturing
• Wholesale & Retail Trade
• Transportation,
Communication & Utilities
• Finance, Insurance & Real
Estate
ADDITIONAL
• Business & Personal Services
• etc…
INDIRECT
Imports
Imports
(Suppliers to Suppliers – firms
buy additional goods and
services from one another for
their own production)
Payments for
Supplies and
Services
Imports
5
Indirect effects on sales
Direct benefit
Indirect benefit
244€+86€+29€+9.7€+3.3€+2.2€+0.4€…
548 €
Tourism in Syracuse,
impact on Sicilian
economy
374 €
6
Impact on Households
Wages, Profits,
Interest, Rent etc.
HOUSEHOLDS
(local community)
added spending
power
Wages, Profits,
Interest, Rent etc.
Wages, Profits,
Interest, Rent
etc.
7
Induced benefits
Wages, Profits,
Interest, Rent etc.
HOUSEHOLDS
(local community)
Imports
Wages, Profits,
Interest, Rent etc.
added spending
power
Purchases of Goods
and Services
Wages, Profits,
Interest, Rent
etc.
ADDITIONAL
INDUCED
(Households added spending power).
• Agriculture
• Manufacturing
• etc…
8
induced effects on sales
Direct + indirect benefit
550 € +
Tourism in Syracuse,
impact on Sicilian
economy
375 €
Induced benefit
225 €
9
induced effects on sales
Direct benefit
Total benefit
Indirect+Induced
effect, Output
multiplier: ~ 2.1
550 €
Tourism in Syracuse,
impact on Sicilian
economy
1150 €
10
Economic Multipliers  flexibility
Regional economic multipliers used to estimate the
secondary [indirect + induced] effects of visitor spending.
• They help to translate the direct spending  estimate of the final impact on:
– sales, income, employment, tax revenues,…
by applying a model of the region‘s economy
11
Employment Multiplier
Tourism is one of the most “labour
intensive” economic sector
Tourism
12
Economic Multipliers  cautions
Regional economic multipliers used to estimate the
secondary [indirect + induced] effects of visitor spending.
• They help to translate the direct spending  estimate of the final impact on:
– sales, income, employment, tax revenues,…
by applying a model of the region‘s economy
confusion and misunderstanding sometimes associated with the
interpretation and analysis of multipliers:
– use of different alternative definitions, such as normal vs. ratio multipliers
–
caution must be exercised when comparing multiplier values from
different studies as multiplier values may differ across destinations or time
13
induced effects on output
Indirect+Induced
effect, Output
multiplier: 2.1
Impact on Sicily
Indirect+Induced
effect, Output
multiplier: 1.3
Impact on Syracuse
14
Multipliers  Impact analysis
• An impact analysis is not a benefit-cost
analysis.
• An impact analysis is not a measure of net
welfare change.
• An impact analysis does not provide insight
into longer term structural change in response to
external stimuli.
15
Assumptions of Input-Output analysis
– the model is static and assumes that there are (unlimited) 'idle
resources' [including labour, land, natural resources and capital] to flow freely to the
tourism sector: any increase in final demand simply met instantly
– prices of goods, services and factors of production fixed: do not
respond to increasing demand – perfect elastic supply)
– the model is linear; for additional output - all inputs are proportionally increased
[however, hotels could have occupancy rates less than 100%…]
– the outputs of each sector are homogeneous [a sector cannot increase the output of one
specific product unless it proportionally increases the output of all its other products]
– technologies of production are fixed [all firms in each sector employ the same technology, and
there are neither economies nor diseconomies of scale and no substitution among inputs. Furthermore, the
employment/output ratio is also fixed]
– requires substantial data and effort to apply it properly [the smaller the region the more need for
the local knowledge]
Most of these limitations become increasingly binding the
greater the simulated change in the impact analysis.
16
Profiling tourists
Profiling tourists: Cultural Tourists and other Visitors
Findings from PICTURE case studies
Barbara Del Corpo et al., in Session 2
Cultural tourism vs. ‘sun&beach’ tourism
17
The case studies:
DirectSyracuse
impacts
Direct impact of one
cultural tourist
485 €
Direct impact of one
sun&beach tourist
585 €
18
The case studies:
DirectSyracuse
impacts
Very similar output multiplier (Indirect+Induced effect):  2.1
Total impact
of one
cultural
tourist
1015 €
Total impact
of one
sun&beach
tourist
1225 €
19
The
Syracuse:
case studies:
length
Siracusa
of stay
Average length of stay:
Cultural
Sun&Beach
2.7 days
8.7 days
20
The case studies:
DirectSyracuse
impacts
Very similar output multiplier (Indirect+Induced effect)  2.1
Daily total
impact of one
cultural
tourist
Daily total
impact of one
sun&beach
tourist
direct+indirect+induced
direct+indirect+induced
375 €
140 €
21
Tourism dynamics
one step beyond multipliers…
22
Traditional economic approach
• Economic impact from Input/output analysis mainly reflects the extent
of inter-linkages and leakages of the local economy of concern
any increase in tourism will look good
• the results should be treated with caution:
- limitations of Input/ Output method, data used and assumptions
made  multipliers can be over-optimistic (or even deceiving*)
- nothing is said about negative economical, environmental and
socio-cultural costs elsewhere in the economy
* a sensitivity analysis can be useful to adjust uncertainty of results
23
More advanced approach
economies  general equilibrium systems with sectoral interactions
– resources are limited  tourism competes with other activities for
resources [tourism tends to pull resources out of other productive uses]
– prices are not fixed  prices (goods, services, land, housing) respond to
increasing demand (may lead producers to change inputs, altering the production structure)
– The increased costs caused by the competition for scarce resources 
reduce the competitiveness of other sectors [they tend to be
displaced – i.e., trade diversion]. Tourism expansion might have a negative
impact on traditional activities
– more modest economic contribution [than predicted by Input/Output]
– uneven redistriburion of benefits (land used in non-tradeable sectors).
– higher costs of living for local residents [inflated prices of goods, services
and land – their income does not increase proportionately
Input-Output models are 'dominated' by CGE (Computational
General Equilibrium) models: a CGE model can be set up to
reproduce exactly the results of an Input/Output model.
24
Syracuse – principal components
Computer & Co
Hotels & Restaurants
Health & Social Work
Real Estate & Renting
Construction
PCA - Principal
Component Analysis
[share of employment]
1st component reflects
'Specialization patterns'
2nd component reflects
Electricity, Gas
& Water Supply
Wholesale & Retail Trade
'Displacement effects'
Mining (non energy)
[explaining, respectively, 44%
and 25% of the variance of the
original data]
25
Statistical Analysis
 are income and prices higher in (cultural)
tourism-specialised cities?
– Level regression [structural differences in a very long-term
perspective - perfect labour mobility]
 are income and prices growing faster in
tourism-specialised cities?
– Growth regressions [structural differences in a shorter-term
perspective – scarce labour mobility]
26
Econometric Analysis: the Database
 Twelve countries
• Austria, Belgium, Denmark, France, Germany,
Ireland, Italy, the Netherlands, Portugal, Spain,
Sweden and the United Kingdom
•
Snapshots at two different time windows
• 1991 vs. 2001
 Fine geographical detail
• generally NUTS 3 (sometimes NUTS 2)
 Three main sources
• Eurostat REGIO
• Cambridge Econometrics, Cambridge, UK
• Michelin Guide
27
Econometric Analysis: the Database
 Economic variables
•
•
•
•
local prices (hotels and restaurants)
employment (by broad sector)
unemployment and active population
application for patents and application per patents in high-tech sectors
 Demographic variables
• population by age, civil status, gender, level of education, nationality
 Tourism specialisation variables
•
•
•
•
number of (and beds in) hotels
Number of beds in hotel / capita
number of (and beds in) campsites
World Heritage Cities
passengers in local airports
flag for presence of World Heritage Cities
 Other control variables
•
•
•
•
flag for rural (density < 150 Km2 )/non-rural
flag for coastal/non-coastal
flag for time (1991 vs. 2001)
regions and countries treated as fixed effects
28
European map: GDP/capita
GDP/capita [ € ]
Year
2001
Difference [%]
1991 ÷ 2001
29
WHC (World Heritage Cities)
European maps: hotel prices
Michelin Guide - € / night in hotel (average value – excluding outliers)
Year
2001
Difference [%]
1991 ÷ 2001
30
European maps: hotel beds / km2
“Density” of hotel beds [ bed / km2 ]
Year
2001
Difference [%]
1991 ÷ 2001
31
European maps: hotel beds / capita
“Density” of hotel beds [ bed / capita ]
Year
2001
Difference [%]
1991 ÷ 2001
32
Econometric Exercise: Main Results
 World Heritage Cities tend to present higher levels of local
prices  higher ‘quality of life’ [in terms of Roback];
 Tourism specialisation has a positive impact on the level of both
income and prices  higher productivity [businesses not only
consider objective factors as connectivity or profitability to locate themselves,
but also qualitative soft factors such as attractivity and standard of living];
 This effect is stronger in World Heritage Cities  cultural
tourism has a stronger impact on local economies than other
types of tourism;
 In the short term, tourism specialisation shows a positive effect
on the growth of prices, but not on income growth.
33
Final remarks

There is no general and "one fits all" recipe to
“optimize” the economic impact of cultural tourism

Public policies can focus on: the characteristics of tourists, local
'tourist industries‘, inter-linkages in local economy,
residents’ behaviour,…

Need of coordination, strong and co-operative partnership with
all private and public stakeholders [integrate tourism policy into
broader government policies, e.g., Local Agenda 21]
34
Final remarks

Market forces might allocate the benefits to a relative small
share of Stakeholders [mainly owners of immobile factors in the
tourism industries]  policies to ‘extract’ those rents and
redistribute them ‘appropriately’  the perceptions of the
impact of tourism must be continually assessed [pro-actively
identify trouble areas]

in the short run higher growth can be achieved by increasing
exploitation of natural and cultural amenities, but, in the long
run, tourism regions flourish only if prices of tourism-related
goods grow faster than, e.g., those of innovation-intensive
goods  shift from quantity to quality-based tourism policies
35
Final remarks

Economic impact assessement is crucially different from
cost/benefit analysis

Cultural tourism is too often seen as a free marginal use of
already existing resources [whose demands can be accommodated
without extra cost or the displacement of other users]  Heritage
costs money

Tourism produces external costs whose burden can be born by
the local community  needs of economic instruments such as
fair and nondiscriminatory ‘environmental taxes’
36
Corso Magenta 63
20123 Milano - Italy
Via Po 53 bis
10124 Torino - Italy
Web http://www.feem.it
37
Cultural vs. ‘Sun&Beach’ Tourism/1

Cultural tourism is often assumed [rather than proofed…] to have higher
local benefits and lower local costs than beach resort tourism:
–
higher daily expenditure [cultural tourists are, on average, older
and of higher education and socio-economic standing than 'sun&beach'
counterparts, preference for hotel accommodation [not so dependent upon the
cost conscious organised package product]
–
–
–
–
shift in products [from low cost, homogeneous mass products to a wider
range of ‘higher cost’ products]
more interested in the consumption of ‘heritage features’ such as, food,
wine, speciality shopping, cultural performances and evening entertainment
more dependent on small medium-sized enterprises [SMEs  encourage
entrepreneurs] and less on "all-inclusive" big tour vacation packages
a more differentiated product is likely to spread both benefits and costs
more evenly, among economic sectors and socially
38
Cultural vs. ‘Sun&Beach’ Tourism/2
–
more spread also spatially and temporally  reduced highrisk seasonal jobs  reduced impacts ['sun&beach' tourism seasonal/
weather dependency causes higher temporal and spatial concentrations - often
in areas with physical environmental shortages or vulnerabilities]
–
Impact mainly on ‘well developed’ urban economy  limites price
hikes [that negatively affect local residents whose income does not increase
proportionately] and the related rise in real estate [less second homes]
–
earnings can support urban renewal to the benefit of tourists and
residents alike [e.g., transport infrastructure and public utilities: sidewalks,
lighting, litter control, public restrooms, water, sewer, …] and preserve/
restore/enhance heritage/cultural offer and Community’s identity
–
community involvement could enhance local awareness, esteem and
pride [sense of ‘identity' and 'well-being' of local communities]
39
Cultural vs. Sun&Beach: however…
There is always an ‘however’ that could disturb such hopeful expectations:

–
cultural tourist not only the ‘stereotypical’ (advanced) middle aged /
higher income / staying in hotel couple ’ but also day visitors,
cruising, ‘young backpacker’, …
–
the length of stay can be much shorter than sun&beach tourists:
–
 greater fragmentation of holidays which multiplies short visits
 cultural tourism products very rapidly consumed [smaller cities  ‘day
visitors’]: sites and attractions need to be combined within larger packages.
sun&beach tourist is spatially concentrated but relatively static, [e.g.,
within a single resort or even a single hotel]. Cultural tourist is mobile,
requires transport and spatial networks [not only move into and out of
destination regions, they also move around when on holiday].
–
mobility and higher incomes couòd give greater access to sensitive
‘attractions’ may have higher negative impact on the environment
40
Cultural vs. Sun&Beach: however…
–
although not so strongly seasonal dependent, in some destinations
‘cultural annual events’ can concentrate tourist fluxes.
–
sun&beach resorts may develop substantial numbers of return
visits, even to a specific resort or hotel ['loyal clientele']. Cultural
tourists tend to have pre-marked sites that must be visited if the place
is to be 'authentically experienced'. Instead of ‘collecting’ a repeat is
better to expand the ‘collection’ somewhere else.
cultural tourists could be more selective in their expenses, they could
be more satisfied by ‘free landscape/heritage fruition’ than by
‘purchasing goods’
–
41
The
Syracuse:
case studies:
age distribution
Siracusa
42
The case studies:
Syracuse:
Siracusa
salary
43