l8 Socioeconomic Evaluation Lecture Notes

8/3/2019 l8 Socioeconomic Evaluation Lecture Notes

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Developing Tourist Destinations:Economic Planning & Evaluation

Dr Gang Li

Tourism Policy and Development


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Outline

Tourism development evaluation

Economic development and tourism development

Economic impacts of tourism

Measurement of economic impact of tourism

Case studies


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Tourism Development, Planning, Policyand Evaluation

Evaluationconsists of any process which seeks to orderpreferences(Hall 1982: 288).

Tourism planning: a process, based on research andevaluation, which seeks to optimize the potentialcontribution of tourism to human welfare andenvironmental quality. Getz (1987:3) Evaluation is part of the planning process

Planning & policy: planning is the purposive process inwhich goals are set and policies elaborated to implementthem (Cullingsworth 1997:5). Policy is to be evaluated.

Development: a process through which a society movesfrom one condition to another, and also to the goal ofthat process (Cowen and Shenton 1996:3).


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Purposes of Tourism Evaluation

Assisting decision making

Planning and resource allocation

Justification and Improvement of policies

Continued support

Determining performance for outcomes: impactassessment

Evaluation exists in any phase of tourism planningand development process


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Economic Development andTourism Development


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Economic Impacts of Tourism Interaction

Both positive and negative impacts

Different channels and levels of the impacts

Direct effect

Indirect effect

Induced effect

Principally on destinations, but also ontourism generating areas


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Typical Areas of Tourism Impacts on acommunity


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Contribution to GDP

GDP: the total money value of all final goods andservices produced in an economy over a one-year period.

GDP=C+I+G+X-M

Consumption: domestic tourism or home-providedelements of an international trip

Investment: by the government on infrastructure;by businesses on buildings, equipment, etc.

Government expenditure: on non-market T&Tservices and operation

eXports: expenditure on goods and services aswell as transportation by international visitors

iMports: the residents spending abroad


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WTTCs Report 2009-2010

The contribution of Travel & Tourism economy to GDP isexpected to rise from 9.2% (US$5,751 bn) in 2010 to9.6% (US$11,151 bn) by 2020.

Real growth for the Travel & Tourism Economy isexpected to be 0.5% in 2010, up from -4.8% in 2009, butto average 4.4% per annum over the coming 10 years.

Export earnings from international visitors are expectedto generate 6.1% of total exports (US$1,086 bn) in 2010,growing (in nominal terms) to US$2,160 bn (5.2% of

total) in 2020. Travel & Tourism investment is estimated at US$1,241

bn, or 9.2% of total investment in 2010. By 2020, thisshould reach US$2,757 bn or 9.4% of total investment


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WORLD TRAVEL & TOURISMINDUSTRY/ECONOMY GDP

http://www.wttc.org/eng/Tourism_Research/Economic_Research/
http://www.wttc.org/eng/Tourism_Research/Economic_Research/http://www.wttc.org/eng/Tourism_Research/Economic_Research/


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WORLD TRAVEL & TOURISMINDUSTRY/ECONOMY GDP


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Estimated Travel & Tourism Industry GDP

Source: WTTC, 2010;



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Estimated Travel & Tourism Economy GDP

Source: WTTC, 2010;



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Employment

Features of employment in the tourism industry: Relative labour intensity

Many low-wage occupations

Much part-time and casual employment

Seasonality Types of employment generated by tourism

Direct: resulting from visitor expenditure and directlysupporting tourism activities.

Indirect: created within the tourism supply sector butnot directly related to tourism activities.

Induced: created as a result of tourism expenditure aslocal residents spend money earned from tourism


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WTTCs Report

Direct employment of the Travel & Tourismindustry is expected to be 81,913,000 in 2010,accounting for 2.8% of total employment. The no.of employment will rise to 104,740,000 by 2020.

The contribution of the Travel & TourismEconomy to total employment is expected to risefrom 8.1%, 235,758,000 jobs or 1 in every 12.3

jobs in 2010, to 9.2% of total employment,303,019,000 jobs, or 1 in every 10.9 jobs by2020.


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WTTCs Report


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Estimated T&T Industry Employment

Source: WTTC, 2010;



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Estimated T&T Economy Employment

Source: WTTC, 2010;



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Criticism

Long and unsociable_____

Part-time positions taken by _______and______ people who are NOT part of working

force A variety of social ________between workers


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Balance of Payments

The balance of payments records all the transactionsthat have occurred between residents of a countryand the rest of the world.

Tourism spending in the overseas destination is

recorded as debitspayments, while tourismexpenditure by international tourists is recorded ascreditsreceipts.

Favourable balance of payments (surplus vs deficit) is

important particularly for developing countries.


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Economic Importance of TourismPolicies in the Balance of Payments

Tourism can attract foreign exchanges more easilyand quickly.

Using tourism to adjust the balance of payments canavoid retaliatory measures from trading partners.

Tourism is not hampered by protectionist measures.

Examples:

In 1966 UK government limited the currencytaken on trips abroad to 50 per day.

Japanese government encouraged outboundtravel in 1980s to reduce international tradesurplus; doubled permitted value of duty-freegood brought back


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Negative Impacts

________: related to land, property and goods __________: the time, effort and money of

developing tourism at the expense of other activitiesor areas of investment

________: heavy reliance on a single industry isrisky in the long run.

________: repatriation of profits generated fromforeign capital investment; not sourcing services andgoods locally.

_________income distribution and employmenttypes Seasonality Demand for public facilities


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Ways to Mitigate UndesirableConsequences of Tourism


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Interdependence between Various Impacts


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Measurement of Economic Impacts

Tourism multipliers: developed based onKeynesian principles of recirculation of a proportionof income by recipients into tourism consumptionspending, which then engenders further income

and employment. Leakage: takes revenue out of the system at each

round due to savings, taxations, expenditureabroad or on imported products.

Simple multiplier =

Where MPC is the marginal propensity to consume.


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The Concept of a Keynesian Multiplier

The total value=1000+500+250+125=2000

50


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Different Multipliers Used in Tourism

The income multiplier: measures the receipts generated as a result of extra

tourism expenditure.

The employment multiplier:

measures the total employment created to direct tourismemployment brought about by increased tourism flows.

The sales multiplier:

measures the additional direct, indirect and induced

turnover generated by additional tourism expenditure.


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The Range of Tourism Income Multipliersfor Selected Types of destinations

Country or region Income multiplier

National economies 1.231.98

Small island economies 0.391.59

US states and counties 0.441.30

UK regions and counties 0.290.47

UK cities and towns 0.190.40

Source: Cooper et al (2005) tourism principles and practice, 3

rd

edition, pp.178.


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Standardised Employment Multipliersfor Selected Destinations

Country employment multiplier

Jamaica 4.61

Mauritius 3.76

Bermuda 3.02

Gibraltar 2.62

Solomon Islands 2.58

Malta 1.99

Source: Cooper et al (2005) tourism principles and practice, 3

rd

edition, pp.180.


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Tourism Satellite Account (TSA):A New Framework

A satellite account is a termdeveloped by the UN tomeasure the size of economic sectors that not definedas industries in national accounts.

The TSA is a newstatistical instrumentdesigned to

measure these goods and services according tointernational standards of concepts, classifications anddefinitions.

"The fundamental structure of the TSA relies on thebalanceexisting within tan economy between on the one

hand, thedemandfor goods and services generated byvisitors and by other consumers and on the other hand,the overallsupplyof these goods and services. The ideais to measure the relationship between all aspects ofdemand and supply.UNWTO 2006


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TSA

Is able to measure:

Tourisms contribution to GDP

Tourisms ranking compared to other economic sectors

The no. of jobs created by tourism in an economy The amount of tourism investment

Tax revenues generated by tourism industries

Tourism consumption

Tourisms impact on a nations balance of payments Characteristics of tourism human resources


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Problems in Measuring Tourism Impacts

Unpaid services: VFR tourists free accommodation and presents for

the hosts.

Non accounted services:

Black economy, avoiding taxation, or simply forconvenience.

Social costs and benefits: social net product vs private net product

Public goods: national parks, heritage buildings.


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Tourism Impact Evaluation

Be objective and critical

Example: impacts of Olympic Games


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Over- and Under Estimation of Event Impacts

Time

Tour

ism

Demand

D2

D3

D0

D1

T0 T1

D0


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Non-Quantitative Methods to Gage theEconomic Impact of Tourism

Critical Factor Analysis:

attractions/activities

location facilities and services

infrastructure

community coordinationcompetition


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Case 1: Golden Weeks in China

Initiated on a trial basis to celebrate National Dayin Oct. 1999.

On the first golden week 28 million peopleparticipated in tourism activities within the country

and spent $1.62 bn. The tourism industry received about 254m

domestic visitors over the national-day Goldenweek in 2010, and the revenue reached $17.5bn.

GOOD? BAD?


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Case 2: A Residential Survey onTourism Impacts in Harbin, China

The full paper about this case study is on ULearn.


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Residential Survey in Harbin

Harbin in Brief

Geographical andhistoricalbackground ofHarbin

Harbins Tourism


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Key Findings


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Key Findings


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Policy Implications?

C 3 Pl i T i P j


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Case 3: Planning a Tourism Project:Hong Kong Disneyland

Pl i T i P j t
http://park.hongkongdisneyland.com/hkdl/en_US/home/home?name=HomePage


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Planning a Tourism Project:Hong Kong Disneyland

Economic benefits:

It will provide a net economic benefit of HK$148 (orUS$19) billion over 40 years.

Attendance in its 1st year is estimated to be 5.2 million,rising to its full annual capacity of 10 million after 15years.

Tourist spending will amount to HK$8.3 billion in Year 1,rising to HK$16.8 billion per annum in Year 20 and

beyond. About 18,400 new jobs are expected to be created

directly and indirectly on opening, rising to 35,800 over20 years.


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The Government's Financial Involvement

Hong Kong Disneyland will be operated by a new joint-venture company - Hong Kong International Theme Parks Ltd(HKITP) - to be formed by the Hong Kong Government andThe Walt Disney Company.

The government is spending a total of HK$22.45 billion:

HK$3.25 billion equity (57% of the shares)

HK$5.6 billion loan to the project company, to be repaid

with interest over 25 years HK$13.6 billion in land formation and infrastructure costs


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From Planning to Operation

Planning: government role: policies

Operation: private sector: management

Staffing

marketing

Capacity

Public relations

Operation: public sectors monitoring and regulation

Successful and sustainable development cannot beachieved without public and private sector co-operation


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Summary

Tourism development

evaluation

PlanningPolicy PlanningPolicy

R f


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References

Texts:

Inskeep E (1994) National and Regional Tourism Planning:methodologies and case studies, London: ITBP, Chapter 6.

Inskeep E (1997) Tourism Planning. New York: Van NostrandReinhold, Part 4.

Sharpley R. and D. Telfer (2002) Tourism and Development:Concepts and Issues. Clevedon: Channel View, Part 2.

Hall CM (2000) Tourism Planning: Policies, Processes andRelationships. Harlow: Prentice Hall, Chapter 4.

Academic papers

Roehl, W. (1999) quality of life issues in a casino destination,Journal of Business Research, Vol. 44, pp223-229.

Wang, Y. G. Li and X. Bai (2005). A Residential Survey on UrbanTourism Impacts in Harbin, China Tourism Research, Vol.1, pp116-129.

Others

Various tourism impact reports (e g WTTC UNWTO)

l8 Socioeconomic Evaluation Lecture Notes

Documents