BML111 ECONOMIC IMPACTS

BML111: Tourism, Events & Des6na6ons: Impacts & Sustainability

The Economic Impacts of Tourism & Events

Aims § To consider the economic characteris/cs of the tourism

and event product / industry

§ To highlight the factors influencing the intensity of

economic impacts

§ To iden/fy the economic benefits and costs of tourism and

events

§ To consider the economic impact of tourism and events in

a range of des/na/on environments

Andy’s Great Big Economics of Tourism and Events Quiz

Round 1:

The Characteris?cs of the Tourism and Events Sector

Characteris6cs Q1: Which of the following are characteris?cs of the tourism and events sector?

A. It’s a vegetable B. It’s like a jigsaw C. It’s vola5le D. It’s elas5c E. It leaks F. It’s good at mul5plica5on

Characteris6cs Q1: Which of the following are characteris?cs of the tourism and events sector?

A. It’s a vegetable B. It’s like a jigsaw C. It’s vola6le D. It’s elas6c E. It leaks F. It’s good at mul6plica6on

The Economic Characteris6cs of Tourism and Events Key considera6ons: § The product is perishable § A highly fragmented sector/product, linking and affec5ng other

sectors of the economy therefore making the full measurement of economic impacts a complex ac5vity

§ Pearce [1989]:

‘the objec/ve and detailed evalua/on of the economic impact of tourism can be a long and complicated task’

Understanding the Economic Characteris6cs of Tourism Key considera6ons: § Tourism is a highly unstable export, suscep5ble to

unpredictable external forces

§ Tourism and events are highly elas5c with respect to income

and price

§ The cyclical paNern of demand for tourist goods and services

has significant implica5ons for employment and investment

§ Low levels of customer loyalty in rela5on to des5na5ons,

products, and events oQen linked to complex tourist mo5va5ons

Understanding the Economic Characteris6cs of Tourism The Leaky Bucket Syndrome:

‘There are two ways to maintain and increase the level in a leaky bucket. One way is to increase the flow. But is it the right way? Surely a more logical way is to mend the bucket and staunch some of the leaks. Staunching the leaks (in the UK context) means addi/onal support for domes/c tourism in England’ [Middleton, 2003]

✗

Nega6ve Economic Impacts: § Leakage of Income § Interest on foreign capital § ‘Debt’ § Money taken by tour operators and airlines § Consump5on of imported goods § Tourists oQen ‘confined’ to resort with liNle interac5on

with the local economy

§ Damage to other Economic Sectors § Lure people and resources away from other sectors of the

wide economy

✓

Enhancing Economic Impacts: Mul6plier Effects § Tourist spending is re-­‐circulated in the local economy

and is therefore worth more to the area than its face value

§ £200 spent on a couple on a short-­‐break in a hotel

could be worth £200*1.4 (the hotel mul5plier effect for that area) = £280

§ The actual value of the mul5plier will vary from region

to region and different sectors of the leisure and tourism industry

§ A mul5plier for a guest house is greater than a large

hotel which is part of a na5onal chain

Enhancing Economic Impacts: The Mul6plier Effect

✗

Nega6ve Economic Impacts: § ‘Opportunity Cost’ § What else could resources be used for?

§ ‘Displacement Effect’ § Tourism replaces one form of expenditure and economic

ac5vity

§ Infla6on § Infla5on effects on local economies rela5ng to land,

property and goods e.g. North Wales/Cornwall / France -­‐ villages have become popular for the purchase of second homes

Round 2:

Tourism, Events and the Economy

Economic Impacts -­‐ GDP Q2: What is GDP?

Enter your response

Economic Impacts -­‐ GDP Q3: According to the WTTC, what is the global value of tourism’s direct industry contribu?on to GDP? A. $1,555bn B. $1,890bn C. $2,008bn D. $2,225bn

Economic Impacts -­‐ GDP Q3: According to the WTTC, what is the global value of tourism’s direct industry contribu?on to GDP?

A.

$1,555bn

B.

$1,890bn

C.

$2,008bn

D.

$2,225bn

Economic Impacts: Gross Domes6c Product (GDP) Factors Influencing Tourism’s Contribu6on to GDP: Bull (1991): § The stock of resources -­‐ natural resources, built facili/es,

human and financial resources

§ The state of technical knowledge -­‐ economic returns from

tourism are highest in those countries with high levels of technical exper/se

§ Social and poli6cal stability -­‐ factors influencing the des/na/on

environment, visitor numbers and hence receipts from tourism

Economic Impacts: Gross Domes6c Product Factors Influencing Tourism’s Contribu6on to GDP: Bull (1991): § A]tudes and habits -­‐ views of the host community and the

individual tourists’ propensity to travel

§ Investment -­‐ government and commercial investment in capital

projects, promo/on, training and business support

Economic Impacts Q4: According to es?mates what is the predicted increase in total UK GDP between 2005 and 2016 as a result of the Olympics?

A. £1.9bn B. £2.5bn C. £3.1bn D. £3.4bn

Economic Impacts Q4: According to es?mates what is the predicted increase in total UK GDP between 2005 and 2016 as a result of the Olympics?

A.

£1.9bn

B.

£2.5bn

C.

£3.1bn

D.

£3.4bn

Economic Impacts Q5: According to Visit Britain sta?s?cs what is the current value of tourism to the English economy?

A. £94.1bn B. £95.8bn C. £96.7bn D. £97.2bn

Economic Impacts Q5: According to Visit Britain sta?s?cs what is the current value of tourism to the English economy?

A.

£94.1bn

B.

£95.8bn

C.

£96.7bn

D.

£97.2bn

Economic Impacts Q6: How much is the heritage tourism sector worth to the UK economy?

A. £9.8bn B. £11.2bn C. £12.4bn D. £13.5bn

Economic Impacts Q6: How much is the heritage tourism sector worth to the UK economy?

A.

£9.8bn

B.

£11.2bn

C.

£12.4bn

D.

£13.5bn

Economic Impacts Q7: In which country does tourism account for 67% of total economy GDP? A. Romania B. Brunei C. Maldives D. Vietnam

Economic Impacts Q7: In which country does tourism account for 67% of total economy GDP? A. Romania B. Brunei C. Maldives D. Vietnam

Economic Impacts Q8: In which country does tourism account for approximately 6% of total employment?

A. Romania B. Brunei C. Maldives D. Vietnam

Economic Impacts Q8: In which country does tourism account for approximately 6% of total employment?

A. Romania B. Brunei C. Maldives D. Vietnam

Economic Impacts Q9: Do visitors to the UK represent an import or export for the Balance of Payments?

A. Import B. Export

Economic Impacts Q9: Do visitors to the UK represent an import or export for the Balance of Payments?

A. Import B. Export

Economic Impacts: Balance of Payments (BofP) Balance of Payments § The ouhlow of Bri5sh money spent abroad = IMPORTS § The inflow of foreign holiday-­‐makers money spent in the UK =

EXPORTS

§ The value of receipts minus the total payments represents a

country’s balance of payments on the tourism account

Economic Impacts Q10: Does the UK currently have a deficit or surplus on the current account for tourism?

A. Surplus B. Deficit

Economic Impacts Q10: Does the UK currently have a deficit or surplus on the current account for tourism?

A. Surplus B. Deficit

Economic Impacts: Balance of Payments (BofP) United Kingdom Travel Account 1976-2000 30000 25000 Earnings from Outbound Tourism (£m.)(Debit Import)

20000 15000

Earnings from Inbound Tourism (£m.)(Credit Export)

£m.

10000

Balance 5000

-10000 -15000

Year

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

1987

1986

1985

1984

1983

1982

1981

1980

1979

1978

1977

-5000

1976

0

Economic Impacts Exchange Rates Values – Sterling v US Dollar Shopping Trip to New York (£1,500)

8th Nov 2007

1st April 2009

29th Jan 2010

30th Jan 2011

26th Jan 2012

2nd Feb 2013

2nd Feb 2014

2nd Feb 2015

27th Jan 2016

(£1 = $2.10)

(£1 = $1.36)

(£1 = $1.61)

(£1 = $1.59)

(£1 = $1.57)

(£1 = $1.57)

(£1 = $1.64)

(£1 = $1.51)

(£1 = $1.42)

$3,159

$2,040

$2,415

$2,398.65

$2,355.73

$2,355

$2,465

$2,259.53

$2136.33

Shopping Trip to London ($1,500) 8th Nov 2007

1st April 2009

29th Jan 2010

30th Jan 2011

26th Jan 2012

2nd Feb 2013

2nd Feb 2014

2nd Feb 2015

27th Jan 2016

($1 = £0.47)

($1 = £0.73)

($1 = £0.62)

($1 = £0.62)

($1 = £0.64)

($1 = £0.64)

($1 = £0.60)

($1 = £0.66)

($1 = £0.702)

£712.05

£1100.4

£930.60

£938.03

£955.797

£960

£912

£995.78

£1053.72

Tourism and the Balance of Payments The Leaky Bucket Syndrome:

‘There are two ways to maintain and increase the level in a leaky bucket. One way is to increase the flow. But is it the right way? Surely a more logical way is to mend the bucket and staunch some of the leaks. Staunching the leaks (in the UK context) means addi/onal support for domes/c tourism in England’ [Middleton, 2003]

Tourism and the Balance of Payments Key Facts: §

B of P deficit fluctuated around £2 to £4bn in the early 1990s but had risen to £15bn in 2001

§

2002 revealed the worst overall B of P (goods and services) since records began over 300 years ago

§

Need to recognise the value of domes5c tourism which outweighs inbound tourism by a factor of 10:1

Round 3:

Visitor Expenditure

Economic Impacts Q11: According to Visit Britain sta?s?cs, 30 million inbound visits generates what level of spend?

A. £11.7bn B. £12.5bn C. £14.6bn D. £16.5bn

Economic Impacts Q11: According to Visit Britain sta?s?cs, 30 million inbound visits generates what level of spend?

A.

£11.7bn

B.

£12.5bn

C.

£14.6bn

D.

£16.5bn

Economic Impacts Q12: How much does the domes?c tourism market spend on overnight trips?

A. £19.2bn B. £21.2bn C. £22bn D. £23.1bn

Economic Impacts Q12: How much does the domes?c tourism market spend on overnight trips?

A.

£19.2bn

B.

£21.2bn

C.

£22bn

D.

£23.1bn

Economic Impacts Q13: What percentage of England’s Domes?c Overnight Holiday Trips are spent in the South East?

A. 11% B. 14 C. 18% D. 21%

Economic Impacts Q13: What percentage of England’s Domes?c Overnight Holiday Trips are spent in the South East?

A.

11%

B.

14%

C.

18%

D.

21%

Economic Impacts Q14: What percentage of England’s Domes?c Overnight Holiday Trips are spent in the South West?

A. 19% B. 22% C. 25% D. 27%

Economic Impacts Q14: What percentage of England’s Domes?c Overnight Holiday Trips are spent in the South West?

A.

19%

B.

22%

C.

25%

D.

27%

Economic Impacts Q15: How many people visit the Arun District each year?

A. 2.8m B. 3.2m C. 3.7m D. 4.1m

Economic Impacts Q15: How many people visit the Arun District each year?

A.

2.8m

B.

3.2m

C.

3.7m

D.

4.1m

Economic Impacts Q16: What is the value of total visitor spending in the Arun District?

A. £187m B. £193m C. £196m D. £199m

Economic Impacts Q16: What is the value of total visitor spending in the Arun District?

A.

£187m

B.

£193m

C.

£196m

D.

£199m

Economic Impacts Q17: According to figures from SQW Consul?ng (2009), what was the total direct spending generated by visitors to the Glastonbury Fes?val?

A. £39m B. £42m C. £48m D. £52m

Economic Impacts Q17: According to figures from SQW Consul?ng (2009), what was the total direct spending generated by visitors to the Glastonbury Fes?val?

A.

£39m

B.

£42m

C.

£48m

D.

£52m

Economic Impacts Q18: What the total visitor expenditure at the Sundance Interna?onal Film Fes?val in 2013?

A. $45.7m B. $52.1m C. $56.7m D. $61m

Economic Impacts Q18: What the total visitor expenditure at the Sundance Interna?onal Film Fes?val in 2013?

A. $45.7m B. $52.1m C. $56.7m D. $61m

Economic Impacts Q19: According to es?mates, what was the total visitor expenditure derived from the Royal Wedding?

A. £107m B. £110m C. £112m D. £115m

Economic Impacts Q19: According to es?mates, what was the total visitor expenditure derived from the Royal Wedding?

A.

£107mn

B.

£110mn

C.

£112mn

D.

£115mn

Economic Impacts Q20: According to es?mates what level of visitor spending is generated by the London marathon?

A. £27.9m B. £30.2m C. £31.7m D. £32.8m

Economic Impacts Q20: According to es?mates what level of visitor spending is generated by the London marathon?

A.

£27.9m

B.

£30.2m

C.

£31.7m

D.

£32.8m

Economic Impacts Q21: How much does Las Vegas earn from gambling revenue each year?

A. $2.1bn B. $3.5bn C. $6.1bn D. $8.2bn

Economic Impacts Q21: How much does Las Vegas earn from gambling revenue each year?

A. $2.1bn B. $3.5bn C. $6.1bn D. $8.2bn

Economic Impacts Q22: How many people a_ended the 2012 Goodwood Revival mee?ng?

A. 134,562 B. 145,398 C. 148,192 D. 152,232

Economic Impacts Q22: How many people a_ended the 2012 Goodwood Revival mee?ng?

A. 134,562 B. 145,398 C. 148,192 D. 152,232

Economic Impacts Q23: How much did the 2012 Goodwood Revival inject into the local economy?

A. £7.5mn B. £9.2mn C. £10.9mn D. £12mn

Economic Impacts Q23: How much did the 2012 Goodwood Revival inject into the local economy?

A. £7.5mn B. £9.2mn C. £10.9mn D. £12mn

Economic Impacts Q24: How many person nights did the 2012 Goodwood Revival generate?

A. 64,500 B. 75,000 C. 95,000 D. 101,000

Economic Impacts Q24: How many person nights did the 2012 Goodwood Revival generate?

A. 64,500 B. 75,000 C. 95,000 D. 101,000

Round 4:

Economic Impacts -­‐ Employment

Economic Impacts Q25: According to the WTTC, how many people does the tourism industry employ globally?

A. 196,500,000 B. 238,277,000 C. 275,450,000 D. 300,600,000

Economic Impacts Q25: According to the WTTC, how many people does the tourism industry employ globally?

A.

196,500,000

B.

238,277,000

C.

275,450,000

D.

300,600,000

Economic Impacts Q26: According to the WTTC, what percentage of the global workforce is employed in tourism?

A. 6.8% B. 7.5% C. 8.4% D. 9.2%

Economic Impacts Q26: According to the WTTC, what percentage of the global workforce is employed in tourism?

A.

6.8%

B.

7.5%

C.

8.4%

D.

9.2%

Economic Impacts Q27: According to es?mates, how many FTE jobs in Edinburgh are supported by the Edinburgh Fes?vals?

A. 4,200 B. 4,500 C. 4,890 D. 5,242

Economic Impacts Q27: According to es?mates, how many FTE jobs in Edinburgh are supported by the Edinburgh Fes?vals?

A.

4,200

B.

4,500

C.

4,890

D.

5,242

Economic Impacts Q28: According to Visit Britain sta?s?cs, how many people work in the tourism industry in the UK? A. 0.9m B. 1.4m C. 1.9m D. 2.6m

Economic Impacts Q28: According to Visit Britain sta?s?cs, how many people work in the tourism industry in the UK?

A.

0.9m

B.

1.4m

C.

1.9m

D.

2.6m

Economic Impacts Q29: How much is tourism worth per Arun resident?

A. £166 B. £122 C. £129 D. £135

Economic Impacts Q29: How much is tourism worth per Arun resident?

A.

£116

B.

£122

C.

£129

D.

£135

✓

Economic Impacts: Employment Types of Tourism Employment: §

Direct -­‐ jobs created as a result of visitor expenditure and directly suppor5ng tourism ac5vity

§

Indirect -­‐ jobs created within the tourism supply sector but not as a direct result of tourism ac5vity

§

Induced -­‐ jobs created as a result of tourism expenditure as local residents spend money earned from tourism

§

Construc6on employment -­‐ jobs generated in the construc5on of tourist facili5es and infrastructure

✓

Economic Impacts: Employment Employment – Key Ques6ons: §

How many people are employed as a result of the tourism industry?

§

What type of job opportuni5es and job mobility exist in the tourism industry

§

What skills do people require and what returns and benefits can be expected from their employment

§

What is the geographical and temporal dimension of this employment?

[Source: Wall and Mathieson, 2006, p. 127]

✓

Economic Impacts: Employment Employment – Key Ques6ons: §

What level of capital investment is required to create this employment and maintain ongoing training of human capital?

§

What is the overall economic contribu5on to na5onal, regional, and local economies of this employment?

§

What are the renumera5on levels of tourism occupa5ons compared to other sectors?

§

What are the paNerns of occupa5onal diversity in rela5on to standards of service requirements, size of the tourist enterprise, loca5on, type of client, and seasonality?

[Source: Wall and Mathieson, 2006, p. 127]

✗

Economic Impacts: Employment Key Issues: § Employment is seasonal § Limited career poten5al § Unsocial hours § Poor working condi5ons § The local popula5on is oQen too small to fill the vacancies § In many areas there are insufficient workers with specific

technical or managerial skills

✗

Economic Impacts: Employment Key Issues: § Outsiders are aNracted in by high wages and the

opportunity to live and work in pleasant or exo5c surroundings

§ Immigrant workers get much of the ini5al employment

benefit

Round 5:

Economic Impacts – Economic Development and Regenera?on

Economic Impacts Q30: What percentage of F1 races were held in Europe in 1988?

A. 20% B. 35% C. 45% D. 62%

Economic Impacts Q30: What percentage of F1 races were held in Europe in 1988?

A. 20% B. 35% C. 45% D. 62%

Economic Impacts Q31: What percentage of F1 races were held in Europe in 2013?

A. 22% B. 28% C. 37% D. 45%

Economic Impacts Q31: What percentage of F1 races were held in Europe in 2013?

A. 22% B. 28% C. 37% D. 45%

Economic Impacts Q32: According to es?mates, how much money was spent in a 60 mile radius of Silverstone as a result of the 2008 Bri?sh Grand Prix?

A. £47mn B. £51mn C. £55mn D. £61mn

Economic Impacts Q32: According to es?mates, how much money was spent in a 60 mile radius of Silverstone as a result of the 2008 Bri?sh Grand Prix?

A.

£47mn

B.

£51mn

C.

£55mn

D.

£61mn

Formula 1: Value and Impact

✓

Impacts of F1: Economic Returns: § F1 events generate an average return of 553 per cent § Japanese Grand Prix – government investment of $4m;

$70m local economic impact gives an es5mated 1,750 % return

§ Monaco – state funding of $3m – genera5ng $120m

spending in the country

§ Nurburgring-­‐ a return of 167% (rural sewng diminishes

its economic impact)

✓

Impacts of F1: Economic Returns: § Canadian Grand Prix (2004) – during the week of the

race: §

Spending at tourist aNrac5ons and exhibits grew 261% compared with the previous week

§

Transport receipts increased 24%

§

Spending rose 20% in sports shops, 12% in department stores and 8% in restaurants

Economic Impacts Q33: Between 2004-­‐2007, what was the total economic injec?on Valencia derived from hos?ng the America’s Cup? A. 2,478m Euros B. 2,578m Euros C. 2,768m Euros D. 2,995m Euros

Economic Impacts Q33: Between 2004-­‐2007, what was the total economic injec?on Valencia derived from hos?ng the America’s Cup?

A.

2,478m Euros

B.

2,568m Euros

C.

2,768m Euros

D.

2,995m Euros

Economic Impacts Q34: What is the collec?ve value of Games-­‐related contracts won by more than 1,500 UK companies?

A. £2.4bn B. £4.2bn C. £5.0bn D. £6.5bn

Economic Impacts Q34: What is the collec?ve value of Games-­‐related contracts won by more than 1,500 UK companies?

A.

£2.4bn

B.

£4.2bn

C.

£5.0bn

D.

£6.5bn

Economic Impacts Q35: Between 2005 and 2017 what is the es?mated spend on Games-­‐related construc?on?

A. £4.2bn B. £5.0bn C. £9.4bn D. £11.9bn

Economic Impacts Q35: Between 2005 and 2017 what is the es?mated spend on Games-­‐related construc?on?

A. £4.2bn B. £5.0bn C. £9.4bn D. £11.9bn

Round 6:

Tourism and Events – Economic Legacies

Economic Impacts Q36: Between 2005 and 2017 what is the es?mated spend on Games-­‐related construc?on?

A. £4.2bn B. £5.0bn C. £9.4bn D. £11.9bn

Economic Impacts Q36: Between 2005 and 2017 what is the es?mated spend on Games-­‐related construc?on?

A. £4.2bn B. £5.0bn C. £9.4bn D. £11.9bn

Economic Impacts Q37: Between 2005 and 2017 what is the es?mated increase in visitor numbers?

A. £10.8m B. £11.5m C. £12.3m D. £12.9m

Economic Impacts Q37: Between 2005 and 2017 what is the es?mated increase in visitor numbers?

A. £10.8m B. £11.5m C. £12.3m D. £12.9m

Economic Impacts Q38: Which is the odd one out?

A

B

C

D

Economic Impacts Q38: Which is the odd one out?

Economic Impacts Q39: Where is this?

Economic Impacts Q39: Where is this?

✓

Posi6ve Economic Impacts: Economic Regenera6on and Development §

Investment in infrastructure/regenera5on

§

Marke5ng and ‘image-­‐making’

Economic Impacts: Economic Regenera6on and Development

✓

✓

Economic Impacts: Legacy What is legacy?

✓

Economic Impacts: Legacy What is legacy?

✓

Economic Impacts: Legacy What is legacy? §

A review of the research literature reveals a notable degree of ‘hesitancy’ over a precise defini5on of legacy

✓

Economic Impacts: Legacy What is legacy? §

Cashman (2005): The use of the word legacy is elusive, problema5c and even dangerous for a number of reasons: ‘When the term is used by organising commiWees, it is assumed to be en/rely posi/ve, there being no such thing as nega/ve legacy when used in this context.

Secondly, it is usually believed that legacy benefits flow to a community at the end of the Games as a maWer of course’

✓

Economic Impacts: Legacy Preuss (2007) ‘Hard’ and ‘Sop’ Event Structures

‘SoQ’ Structures

‘Hard’ Structures

• Knowledge (e.g. organisa5onal, security, technological • Networks (e.g. poli5cal, sports When ‘event federa5ons, security) structures’ change • Cultural goods (e.g. cultural iden5ty, cultural ideas, common memory) the supply-­‐side

characteris/cs of a des/na/on, any subsequent ac/vity based on or resul/ng • Primary Structure (e.g. sport infrastructure, from these ac/vi/es training sites) is the event legacy • Secondary infrastructure (e.g. village for athletes, technical officials and media) • Ter5ary structure (e.g. security, power plants, telecommunica5on networks, cultural aNrac5ons)

✗

Nega6ve Economic Impacts: § ‘Net Legacy Benefit’ § Redistribu6ons -­‐ the alterna5ve investment (opportunity

costs) would have created alterna5ve legacies

§ If an event pulls in an extra 10% of visitors, but average

visitor growth preceding the event has been 7% then the legacy is only an increase of 3%

§ Crowding-­‐out -­‐ benefits that cannot be ac5vated due to

limited capaci5es have to be deducted from the event legacy; e.g. event related visitors crowding out ordinary visitors

Learning Outcomes: At the end of this session you should be able to: § Iden/fy the economic characteris/cs of the tourism and

event product / industry

§ Discuss the factors influencing the intensity of economic

impacts

§ Iden/fy the economic benefits and costs of tourism and

events

§ Discuss and evaluate the economic impact of tourism and

events in a range of des/na/on environments

Andy’s Great Economics of Tourism and Events Quiz