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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/8/3/2019 l8 Socioeconomic Evaluation Lecture Notes
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WORLD TRAVEL & TOURISMINDUSTRY/ECONOMY GDP
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Estimated Travel & Tourism Industry GDP
Source: WTTC, 2010;
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/8/3/2019 l8 Socioeconomic Evaluation Lecture Notes
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Estimated Travel & Tourism Economy GDP
Source: WTTC, 2010;
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/8/3/2019 l8 Socioeconomic Evaluation Lecture Notes
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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;
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/8/3/2019 l8 Socioeconomic Evaluation Lecture Notes
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Estimated T&T Economy Employment
Source: WTTC, 2010;
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/8/3/2019 l8 Socioeconomic Evaluation Lecture Notes
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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=HomePage8/3/2019 l8 Socioeconomic Evaluation Lecture Notes
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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)