Modeling and new trends in tourism a contribution to social and economic development

Title: Modeling and new trends in tourism : a contribution to social and economic development / editors, Kostas, Rontos, José António, Filipe and Paris Tsartas Professor at the Univers

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H OSPITALITY , T OURISM AND M ARKETING S TUDIES

A C ONTRIBUTION TO S OCIAL

AND E CONOMIC D EVELOPMENT

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Library of Congress Cataloging-in-Publication Data

Names: Kostas, Rontos, editor | António, José, Filipe, editor | Tsartas, Paris,

editor

Title: Modeling and new trends in tourism : a contribution to social and

economic development / editors, Kostas, Rontos, José António, Filipe and

Paris Tsartas (Professor at the University of Aegean, Sociology

Department, Greece, and others)

Description: Hauppauge, New York : Nova Science Publishers, Inc., [2016] |

Series: Hospitality, tourism and marketing studies | Includes index

Identifiers: LCCN 2016034019 (print) | LCCN 2016050461 (ebook) | ISBN

9781634859202 (hardcover) | ISBN 9781634859431 (ebook) | ISBN 9781634859431

Subjects: LCSH: Tourism | Tourism Marketing | Tourism Managment |

Economic development

Classification: LCC G155.A1 M557 2016 (print) | LCC G155.A1 (ebook) | DDC

338.4/791 dc23

LC record available at https://lccn.loc.gov/2016034019

Published by Nova Science Publishers, Inc † New York

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C ONTENTS

João Albino Silva, Manuel Alberto M Ferreira, José António Filipe and Manuel Coelho

Chapter 2 The Geography of Tourism in Europe: Exploring Countries

and Regions of Higher or Lower Development of Tourism

Kostas Rontos, Luca Salvati, Maria-Eleni Syrmali, Ioannis Vavouras and Efstratia Karagkouni

Chapter 3 Anti-Commons, Regulation and Tourism:

José António Filipe

Chapter 4 Islands and Tourism: A Comprehensive Framework

Dimitrios Lagos, Eleni Kitrinou, Kostas Rontos and Mihail Diakomihalis

Chapter 5 Tourism Development Models in Greece:

Trends and Challenges in an Effort to Change the Paradigm 79

Paris Tsartas, Efthymia Sarantakou and Alexios-Patapios Kontis

Chapter 6 Anti-Commons in Tourism: Evidence from Portugal and Bulgaria 97

José António Filipe and Desislava Yordanova

Chapter 7 Healthwwwcare Total Globalization of Healthcare 115

Paulo Sintra

Chapter 8 Neuromarketing Applied to Tourism: An Introductory Vision 135

José Chavaglia, José António Filipe and Manuel Alberto M Ferreira

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Contents

vi

Chapter 9 Mega-Sporting Events: Their Emerging Importance

for Tourism And Societies and the Need for Their Strategic

Petros Rontos

Chapter 10 The Integration of Greece in the System of International

Tourist Operations (1945-1974): A Quantitative Analysis 163

Savvakis Manos and Nikolakakis Michalis

Chapter 11 About Some Stylized Facts on Tourism:

António Bento Caleiro

Chapter 12 Data Driven Marketing Decision Making:

An Application of DEA in Tourism Marketing Channels 195

Alexios-Patapios Kontis and Dimitrios Lagos

Chapter 13 Sport Events Tourism: A Perspective Analysis

Teresa Palrão and José António Filipe

Chapter 14 An Organization Design Redefinition for the Tourism Sector

Using Design Thinking: Sustainable Hotels Case Study 231

David Lamelas, José Lamelas and José António Filipe

Chapter 15 Sociability and the Intention to Return to a Hostel 273

Paulo Rita, Ana Brochado and Rita Marques

Chapter 16 Sky Commons as a Basis to Explore the Touristic Potential

Áurea Rodrigues and José António Filipe

Chapter 17 Management Style Preference and Its Impact on Employee

Job Satisfaction in Independent Hotels: An Exploratory Study 303

Rebecca Bennett and Miguel Moital

Chapter 18 Energy Use in Hotels: Environmental Policies towards

Katerina Parpairi

Pedro Quelhas Brito, Antónia Correia and José Luís Barros

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P REFACE

Tourism is a key driver of economic growth at the global level More specifically, it consists on a critical sector of economic activity for advanced and developing economies as well Tourism may decisively contribute to output and employment and as a result it can be used as a strategic tool for global economic recovery It may constitute a basic pillar of development and an effective solution for many of the world’s greatest challenges Also, it should be pointed out that tourism is a complex and diversified product, which is currently shaped under the spectrum of the recent global financial crisis It is one of the dynamic sectors strategically positioned to advance poverty alleviation, job creation, inclusive growth and environmental sustainability Therefore, apart from the extensive economic consequences tourism has a major social impact as well

Despite global challenges, tourism continues to be a dynamic sector stimulating social and economic development Many economies have developed their structures in order to offer more services and become an appealing destination In this very competitive context, countries look for relative advantages and try to develop new tourism products As a result, the relative importance of this sector for specific areas is emphasized making a powerful contribution to the enhancement of tourism competitiveness, employment, the prosperity of people as well as the reinforcement of the associated natural and cultural poles of attraction Based on the aforementioned analysis, the existence of a coherent and operational framework

is essential so as to explore the distribution of tourism activity at the global scale

This Book provides a set of models contributing to a new vision for the contemporary tourism economy, showing new trends in this sector and following a scientific approach concerning new policy design, aiming at understanding and explaining a new philosophy carried out by governments in terms of the management of tourism sector On the other hand,

in the private sector of the economy business opportunities considering the perspectives of tourism are also analyzed The objective of this Book is to present the new tendencies in tourism area based on scientific methodologies in order to support agents’ decisions either in public or private sector In this Book many scientific challenges are confronted in order to model and explain countries’ tourism sector, regional and local conditions of tourism, territories’ sustainability and new trends on tourism The aim of the present Book is to provide some contribution to the areas highlighted above

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Kostas Rontos, José António Filipe and Paris Tsartas viii

The insightful comments of the Advisory Committee on the manuscript are gratefully acknowledged Their valuable suggestions have led to considerable improvements concerning the scientific quality of the current book

The Editors,

Kostas Rontos

José António Filipe Paris Tsartas

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Chapter 1

João Albino Silva1, Manuel Alberto M Ferreira2,

José António Filipe2,* and Manuel Coelho3

1Faculdade de Economia, Universidade do Algarve

2Instituto Universitário de Lisboa (ISCTE-IUL), Business Research Unit (BRU-IUL) and Information Sciences,

Technologies and Architecture Research Center (ISTAR-IUL), Lisboa, Portugal

3ISEG-Lisbon School of Economics and Management, Universidade de Lisboa, CIRIUS and SOCIUS, Lisboa, Portugal

In Portugal, tourism is one of the most important economic sectors Recently, with the development of the global crisis, particularly reaching the southern European Countries, this sector has strengthened and reinforced its importance due to the important rents got by Portuguese regional and local agents Consequently, this topic is now particularly relevant In this study, factors explaining demand, supply and prices are discussed At macroeconomic level, it is seen how they contribute to model the Portuguese tourism market A relationship among the variables is analyzed and its modeling is represented mathematically The model gives an important contribution to show the importance of these variables and relationships in the determination of macroeconomic aggregates in the Portuguese tourism market

Keywords: tourism, portuguese market, tour operator, tourism demand, tourism supply

*

Corresponding Author Email: jose.filipe@iscte.pt

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João Albino Silva, Manuel Alberto M Ferreira, José António Filipe et al

2

The discussion of tourism problems is classical Many developments have brought tourism models to the actual debate However, nowadays there is a painful global crisis existing in many economies, as it is the case of Portugal or even Greece, for example Accordingly, this topic results now particularly relevant

The economy of tourism gathers a wide range of very diverse studies highlighting the importance of tourism as an economic activity and as an economic sector with high social and even cultural implications in communities’ forms of organization Tourism has become a strong economic force in many countries and regions around the world, bringing important development and a wide diversity of tourism activities to regions and countries Strengthening these activities, a set of many significant transformations resulted as a consequence as happened many considerable social, cultural, economic, political and environmental changes

in societies, causing significant changes in people’s job opportunities and working conditions

of populations, in the patterns of life and in the distribution of income among individuals, groups and regions

In the international context of Tourism, an ever increasing number of destinations worldwide have opened up to, and invested in tourism, turning tourism into a key driver of socio-economic progress through export revenues, the creation of jobs and enterprises, and infrastructure development

As can be seen in the UNWTO (2014a), over the past six decades, tourism has experienced continued expansion and diversification, becoming one of the largest and fastest-growing economic sectors in the world Many new destinations have emerged in addition to the traditional favorites of Europe and North America Despite occasional shocks, international tourist arrivals have shown virtually uninterrupted growth – from 25 million in

1950 to 278 million in 1980, 528 million in 1995, and 1087 million in 2013

In 2014, international tourism set a new record with over 1.1 thousand million international tourists travelling the world (an increase of about 5% according to UNWTO World Tourism - UNWTO 2014b)

Tourism represents (UNWTO 2014a):

 9% of GDP (direct, indirect and induced impact)

 1 in 11 jobs

 6% of the world exports

The tourism in Portugal is very important in terms of macroeconomic aggregates Very particularly, there are several Portuguese regions in which tourism is the main contributor sector for Gross National Product

In terms of the World Economic Forum (WEF) - Travel and Tourism Competitiveness Index (2011), Portugal is one of the 20th most competitive tourism destinations in the world ranked in the 18th place in the WEF Index (2011), what shows how important tourism is as economic activity in Portugal According to the Report of World Tourism Organization (UNWTO 2008), Portugal already had more than 12 million people visiting Portugal, more than the Portuguese population In 2008, tourism has generated about 5% of GVA of Economy, which is approximately 7.3 billion euro According to the Report on

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The Portuguese Tourism Market 3

Competitiveness of Travel and Tourism, 2008 (World Economic Forum 2008), Portugal occupied the 15th place that year, in a list of 130 countries in the ranking of competitiveness

of the tourism sector Overall Portugal climbed seven positions compared to 2007 (22nd in 2007) and four positions in all 27 EU countries Portugal is ranked in the 8th place in overnight stays and in the 11th place in tourism revenue, in terms of the UE 27 Ranking (Eurostat 2011)

Amador and Cabral (2009) presented a detailed analysis of the evolution of the services sector in Portugal and showed that this favorable trend was being verified in this sector in general and in particular that Portugal was revealing a comparative advantage in the sector of Travel and Tourism

In 2011, in Portugal tourism represented:

 About 12 million international tourists

 40 million overnight stays

 8.1 thousand million euro tourism revenue

 A positive “tourism balance” of 5.1 thousand million euro

 43% of total exports of services

 14% of total exports of goods and services

Source: INE (2012), Banco de Portugal (2012)

These facts explain why a model like the one developed in this study for tourism market

in Portugal is so relevant The model implemented considers a set of variables and relationships that will be explained in the next chapter

In the Tourism Business Literature there are very different approaches for modelling tourism markets Many are based on marketing area features, intending to develop models

based for example on motivations or aspects related to destination versus origin countries (for

instance Valle et al (2006) explore the relationship between tourists satisfaction, measured by overall satisfaction in terms of holiday experience, destination attributes and met expectations, and destination loyalty intentions), others use the importance and the updated concern about sustainability (see for example Butowski 2012), others yet use macroeconomic aspects to create dynamic general equilibrium models, studying for instance macroeconomic effects resulting from the increase in tourism demand due for example to an exogenous increase in foreigner’s income - Schubert and Brida (2009) state for example that by using a dynamic general equilibrium model it is possible to show that an increase in tourism demand leads to an increase in relative price of domestically produced tourism services and rises tourism production Tribe (2011) for example explains the importance of microeconomic issues, as the actions of individuals (demand) and firms (supply), interacting to determine prices in specific markets; this author also highlights the importance of macroeconomic issues, by considering the economy as a whole and dealing with aggregates (concepts as consumers expenditure, aggregate demand, national output or product are used) Based on the

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Tourism economic analysis needs variables measurement such as individuals (demand) and firms (supply) actions It needs also interactions among these actions to determine prices

At a macroeconomic level, national product measurement is important for models working these variables (Tribe 2011)

The present model main features for the Portuguese tourism market (based on Silva 1991) have in consideration the following aspects:

 The study of the market of the tour operator (travel agency);

 A strong support on microeconomic theory;

 It is supported on 3 items: demand, supply and prices;

 It permits to obtain results associated to exogenous variables and to tourism rents

In fact, the macroeconomic building of a model like this one is supported on a set of suppositions around the tourism product, economic agents and the several different types of existing markets

In the Portuguese tourism market it is relevant to consider three economic agents:

 The tour operator/travel agency

 The accommodation company/hosting company (hotels, hostels, etc)

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have a significant part of market share and this is quite relevant to be considered in the analysis

Their positioning in the market and their economic capacity allow them to be very accurately vigilant to the features of the markets and to be aware of changes in the habits and economic conditions of the tourists

This shows how important is their great bargaining power among firms that offer services

in the country, especially in companies for accommodation (hotels and similar)

It is particularly impressive the power of intervention on prices and the possibility of withdrawal of accommodation services if they do not have enough demand for the programs they offer The costs of this operator will thus be closely linked to the acquisition of services

to include in the package

Company for Accommodation/Hosting Company

The hosting company emerges as the main supporting infrastructure for tourists Its term, goals are to increase occupancy and to improve the revenue per bed The tour operator

short-is its main interlocutor, that makes it a price taker (can’ not enforce the rack rate, which short-is the price that would maximize its utility function)

The company has significant fixed costs The “variable costs” are the variable that has a direct and proportional connection with “overnight stays.”

The supply of accommodation is in turn a function of the stock of fixed capital, which combined with the staff, ensures the service to be provided to tourists

Tourist

Moving from his/her place of habitual residence, whether abroad or in Portugal, for a period exceeding 24 hours, the tourist accommodation is the main support infrastructure in place he/she is visiting

The tourist is a consumer who seeks the tourism product because he needs it and because

he has financial capacity to acquire it

This “good” or tourism product results from a concrete plan that tourists draw up, or results from one plan accepted by the tourist that is drawn up by the operator It includes the location or destination (possibly several), and the activities he wants to accomplish and yet the cost travel

It is considered that tourists from abroad primarily use the services of tour operators (‘packages’ or holiday programs) National tourists, in turn, project (produce) their holiday program, which leads them to directly contact the housing companies

Tour operator, hosting company and tourist represent the major economic players in the Portuguese tourism market Each one of them wants to maximize its respective utility function and will have its own restrictions The tour operator may not sell more “packages” than the acquired overnights The hosting company has the housing capacity as the main obstacle to an increased supply of overnight stays Tourists will naturally be dependent on either their needs or their ability to purchase travel

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6

THE DESIGN OF THE MODEL AND THEORETICAL DISCUSSION

Some Blocks for the Model

In this model of the tourism market in Portugal there are three blocks: the demand, supply and prices

Demand Function for Foreign Visitors by Country

For emitter countries of foreign tourists in Portugal (Spain, France, Holland, Germany and UK are the main tourists’ suppliers for the Portuguese market), the main determinants of overnights (variable to be explained) relate to the following variables:

 Non-essential consumption of households in the emitters;

 Purchasing power of the currency of the emitters;

 Price of accommodation in Portugal corrected by the exchange rate of the emitter country, if it is the case;

 Price of goods and services in Portugal weighted by competition from other countries

of destination;

 Overnights spent in the previous year,

 Time (trend effect)

For each of these variables the following explaining factors are listed:

a) Purchasing power of the currency of the emitters (PCME);

This variable relies on the assumption that tourists are sensitive to changes in exchange rates and price increases in tourist destinations, compared with prices at the place of residence

or in the emitter country Its calculation is derived from the knowledge of inflation rates in the country of destination adjusted by the existing ones in the country of origin This will deflate the exchange rates, showing how much the holiday in a tourist destination costs in real terms, compared with its cost at the place of residence

b) Non-essential consumption of households in the emitters (CPNE)

For establishing the values of this variable was considered as non-essential consumption the one that does not include expenditure on (statistical aggregates):

 Food, beverages and tobacco;

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 Clothing and Footwear;

 Housing;

 Medicines and medical care

These items appear in the National Accounts as part of final consumption of households

on the economic territory

This represents the hypothesis that the families will travel in tourism after the guaranteed expenditure on goods and basic services

c) The price of accommodation in Portugal adjusted by the exchange rate of the emitter country (PHTC)

This variable is considered as associated with the average price of “packages” sold in the

UK, weighted by the exchange rate of each emitter country (if considering just the main euro emitter country)

non-d) Price of goods and services (IPC) in Portugal weighted by the prices of goods and services (IPC) of competing countries

The purpose of this variable is not only to measure the relationship between the prices of goods and services between sender and receiver country weighted by their exchange rate, but also to include the competitiveness of other destinations comparatively to Portugal, via weights which result from the market share for these countries (destinations) to the main flows of tourists travelling to Portugal

e) Overnight stays in the previous year (D1)

The purpose of a visit that took place recently, either to repeat or to inform others, influences the flow of tourists away

f) Trend effect (T )

Broadening the scope of the previous variable, this effect has structural characteristics that, in tourism, in many situations can’ not be neglected (habits, knowledge to be extended or the pleasure of seeing landscapes and climates can be explained by the trend)

Mathematically tourism demand for the emitter country can be expressed as follows:

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8

2

D - Foreigners individually;

PCME - Purchasing power of the currency of the emitters;

CPNE- Non-essential consumption of households in the emitters;

PHTC - The price of accommodation in Portugal adjusted by the exchange rate of the

emitter country;

PR - The price of goods and services in Portugal weighted by the prices of goods and services by major competitors in tourism;

( 1)

DEST  - A measure of demand: represented by the number of overnight stays of

foreigners in the previous period;

T- The tendency or effect “trend-time”;

DU- The “DUMMY” variable

It is expected that variablesPCME , CPNE , DEST  and ( 1) T are directly related with dependent variable DEST, this is ( )

0

DEST PCME

DEST DEST

0 ( )

DEST T

To estimate the impact of changes in the variables in tourism demand, the coefficients associated with this impact need to be estimated, and the previous equation be expressed in the following way:

DEST a CPNE PCME PHTC PR DEST  T E

Using the method of least squares regression, and after a logarithm, this equation can be estimated as presented below, introducing DUMMY variable (just now for reasons of mathematical operating of the model):

lnDEST lna oalnCPNE a lnPCME a lnPHTC a lnPR a lnDEST( 1)  a lnT DU lnE

So it is allowed the coefficients to be interpreted as the elasticity of the dependent variable for each of the explanatory variables

Demand Global Function for Foreign Visitors

The explanatory variables in global demand for foreign visitors presented in this model are:

 Private consumption in EU countries;

 Housing Prices in Euro;

 Purchasing power of the Euro (once United Kingdom is an important issuing country

- one of the five most important - it is used the relationship Euro versus British

Pound); and just considered the exchange rate Euro/Pound)

The approach made to the variables used in the demand function by the issuing country has some limitations, which are related to the failure to achieve overall series for those

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variables and not considering appropriate to proceed to a mere sum of the grades obtained for each issuing country

In its algebraic presentation, this function comes with the following form:

DEG f CP PHEURO PCEURO

where

DEG-Measure of demand for Portuguese tourism services, represented by the number

of overnight stays of foreigners;

CP- Private consumption in EU countries

PHEURO - Housing price in euros, running the euro as reference currency for all emitting countries (excluding UK: it will be considered its exchange rate with the pound sterling)

PCEURO - The purchasing power of the Euro in relation to the pound

It will be used the same method as in the previous equation

Demand Function for National Tourists

To explain the nights spent by Portuguese Tourists in national hotels (

p

D ), the variable private consumption (CP) and trend (T) are considered as the major determinants

Algebraically this function will be:

Function of Tourism Production

The tourism production consists of the nights spent, considering the maximum capacity

of companies The potential production will result from considering the effective overnight bed occupancy

This potential production is correlated with investment which changes will be reflected in the stock of capital, and with staff admitted in a situation of rigidity

Moreover, it is admitted the existence of constant returns on scale, with a Cobb-Douglas function, and it will be established a relationship between the average productivity of labour and the coefficient of capitalistic intensity, emerging the capital as an explanatory variable Thus

X f L K

where

X - The potential tourism production that is represented by tourists’ overnights;

L- The labour factor, given by the average of workers in service during the year;

K- The effective capital stock

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It is considered that the price will influence demand, through supply side

At first, we have the price of the “package” offered by tour operator (linked to exogenous variables such as inflation in the emitters) to establish the international demand for tour

“packages.” This price also influences the housing supply

In turn, the hosting company submit a higher price (the price of “counter”) for taking up excess capacity For the definition of this price, this company will carry out a costs analysis

An estimate of the cost-function in the hosting company will assume the dependent variable (variable costs) will be explained by overnights and by the prices of goods and services purchased by this company (intermediate consumption)

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L- The number of people working in hosting companies;

K- The fixed capital stock for hosting companies

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12

The Market and the Determination of Prices

Tour Operator and Its Utility Maximization (Profit)

Call san auxiliary variable and  the Lagrange multiplier

After Kuhn-Tucker conditions, with   0:

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The Portuguese Tourism Market 13 Once

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( c)

c c

q p

p q p

If pvis considered constant, pcwill depend on the demand functions

With the conditions of saturation ( q1  q2), and p v 0and p c 0, the respective elasticity will be studied through

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An example can be found when

And now for

1( )

Hosting Company and Its Utility Maximization (Profit)

After fixing pv by tour operator and being pc determined, it is now just necessary that hosting company use this price to the maximization of its profit So,

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 , which solution can give us some

clues about the stability of the complete solution, it is obtained:

2 1

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18

seen how these factors contribute to model the Portuguese tourism market A relationship among the variables is analyzed and its modelling is represented mathematically The model allows to conclude about the contribution of this kind of model to show the importance of these variables and relationships to the determination of macroeconomic aggregates in the Portuguese tourism market The study of the influence of relevant variables and their relationships appears as a crucial investigation on the perception and improvement of the Portuguese tourism market operators This study provides a model that allows to work the quantitative data and obtain the economic impacts of agents in the tourism sector The mathematical formulation allows also to study tour operators market (market’s main agents)

It also permits to analyze quantitative economic impacts of hosting companies’ total rents (which are the main supportive infrastructures)

The proposal of this model is workable by using the total rents of hosting companies, aiming yet to analyze the quantitative economic impact of these rents in the Portuguese National Product

Such a model like the one developed represents a tool for tourism companies to improve their results and the services they provide

Amador, J., and S Cabral 2009 O Comércio Internacional de Serviços na Economia

Portuguesa, Banco de Portugal, Boletim Económico, Outono 2009, 229-249

Butowski, L 2012 Sustainable Tourism – A Model Approach, in Visions for Global Tourism Industry - Creating and Sustaining Competitive Strategies, Dr Murat Kasimoglu (Ed.),

ISBN: 978-953-51-0520-6, In Tech, Available from: http://www.intechopen.com/ books/visions-for-global-tourism-industry-creating-and-sustaining-competitive-strategies/ sustainable-tourism-a-modeling-approach

Ferreira, M A M., and I Amaral 1988 Integrais Múltiplos Equações Diferenciais Lisboa:

Edições Sílabo

Instituto Nacional de Estatística 2009 Conta Satélite do Turismo (2007 – 2009), Destaque:

Informação à Comunicação Social.”

Instituto Nacional de Estatística 2009 Tourism Statistics 2009, Edition 2010

Schubert, S F., and J G Brida 2009 The Macroeconomic Effects of Changes in Tourism

Demand - A Simple Dynamic Model Tourism Economics, Vol 15, No 3, pp 591–613 Silva, Albino J 1991 O Turismo Em Portugal Uma Análise de Integração Micro- Macroeconómica, PhD Thesis, not published, ISEG, Universidade Técnica de Lisboa

Silva, J A., M A M Ferreira, J F Amaral, J A Filipe and M Coelho 2011a “A Model for

the Portuguese Tourism Market,” 10th International Conference on Applied Mathematics

- APLIMAT 2011 Slovak University of Technology in Bratislava Proceedings, 1 (1),

261-1275

Silva, J A., M A M Ferreira, J F Amaral, J A Filipe and M Coelho 2011b A Model for

the Portuguese Tourism Market, Aplimat-Journal of Applied Mathematics, 4 (1),

299-313

Tribe, J 2011 The Economics of Recreation, Leisure and Tourism, 4th Edition, Heinemann, Oxford (imprint of Elsevier)

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Butterworth-The Portuguese Tourism Market 19

UNWTO 2008 UNWTO World Tourism Barometer, Volume 6, nº2, June 2008

UNWTO 2014a UNWTO Tourism Highlights - 2014 Edition UNWTO World Tourism Organization

UNWTO 2014b International Tourism on Track to End 2014 with Record Numbers WNWTO - World Tourism Organization Press Release

Valle, P., J Silva, J Mendes and M Guerreiro 2006 Tourist Satisfaction and Destination

Loyalty Intentions, International Journal of Business Sciences and Applied Management,

1 (1), pp 25–44

World Economic Forum 2008 The Travel and Tourism Competitiveness Report 2008, http://www.weforum.org/ttcr08 browse/index.html

World Economic Forum 2009 The Travel and Tourism Competitiveness Report

World Economic Forum 2011 Travel and Tourism Competitiveness Index

Other Institutional/Statistics

Banco de Portugal 2012

Eurostat 2011 European Comission

INE 2012

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Chapter 2

Kostas Rontos1,*, Luca Salvati2, Maria-Eleni Syrmali1,3,

Ioannis Vavouras3 and Efstratia Karagkouni1

1Department of Sociology, University of the Aegean, Mytilene, Greece

2Italian Council of Agricultural Research and Economics (CREA), Rome, Italy

3Department of Public Administration, Panteion University of Social and Political Sciences, Athens, Greece

Tourism is a fundamental sector at the global level and constitutes a development pillar of the European economy Tourism exerts a great impact on employment and output and as a result it may constitute a basic tool for economic recovery after a period

of recession Therefore, apart from its economic dimension tourism has a major social impact Also, it should be pointed out that tourism is a complex product and is currently examined under the spectrum of the recent global financial crisis Due to the aforementioned factors, the existence of a unified and coherent analysis is essential so as

to explore the distribution of tourism activity among countries and regions of Europe As

a result, the relative importance of this sector for several parts of Europe is analyzed providing a useful framework for the enhancement of tourism competitiveness, the prosperity of people, the job enhancement as well as the reinforcement of the associated natural and cultural poles of attraction

Keywords: tourism, development, employment, financial crisis, sustainability

*

Corresponding Author: Email: K.Rontos@soc.aegean.gr

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Kostas Rontos, Luca Salvati, Maria-Eleni Syrmali et al

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Tourism consists one of the most fundamental and dynamic pillars of the global economy (Cunha, 2013) Apart from the importance of tourism in the global scene, the significance of tourism sector is recognized at the European level as well (Organization for Economic Co-operation and Development 2014) In fact, Europe is considered as the most popular tourism destination at the global level (World Tourism Organization 2012) Therefore, tourism consists the most basic pillar of development as far as the European economy is concerned Moreover, apart from the economic dimension of this economic activity, tourism has an important social impact as well (Deery, Jago and Fredline, 2012) As a result, tourism may act

as a driving force for development in certain countries and regions of Europe, especially of the Mediterranean region (Bramwell 2003) The infrastructure, which is created for the promotion of tourism, could contribute to local development even in areas of industrial degradation (Khadaroo and Seetanah 2007)

Tourism has an important impact on employment (Ahlert 2007) It may consist a basic tool for the reduction of unemployment and the economic recovery in a period of economic crisis (Tribe 2016) At the European level the contribution of tourism in development and employment has already been recognized1 More specifically, it is estimated that at the European level the contribution of tourism in GDP is 10% and in employment 12% (European Commission 2010) These percentages confirm the fact that tourism is an economic activity, which is labor intensive (Kusluvan 2003) This empirical result ascertains the importance of tourism not only for economic growth and development but for social development as well along with economic stability and social cohesion It should be also emphasized that the expansion of the European Union in the 2000’s has increased the diversity of tourism destinations and products As a result, great disparities have been noted regarding the expansion of tourism product in Europe (Paulo 2000)

However, despite the important economic and social impact of tourism it should be noted that until recently the tourism sector did not constitute a basic priority of applied policies at the European level The actions of the European Community were basically restricted to the primary and secondary sectors of the economy with a major emphasis to the enhancement of competitiveness of the secondary sector In the Treaty of Rome (1957), which as is widely known established the European Community, only an indirect reference to tourism has been made As a result, tourism is not considered as a major economic activity at least at the European level so as to support the appropriate policies for the promotion of it This analytical framework regarding tourism at the European level has remained unchanged for over 30 years It should be noted that during the 1980s the interconnection of tourism with the broader social and economic structure came into the fore (Lane 2012)

More analytically, in the Treaty of Lisbon the adoption of a new legal framework concerning tourism is suggested so as to render Europe an attractive tourism destination at the global level (Villanueva-Cuevas 2011) Moreover, within this framework of analysis the importance of tourism for rural and coastal areas is emphasized Based on the Treaty of Lisbon, the need to better coordinate tourism policies for Europe and the associated funding is recognized Since the Treaty of Lisbon, the collaboration of European Union with the European Council, the European Parliament and the Committee of Regions regarding the

1

http://ec.europa.eu/growth/sectors/tourism/index_en.htm

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The Geography of Tourism in Europe 23

issues of European tourism has been significantly improved (Commission of the European Communities 2001) As a result, a coherent framework of analysis with respect to the effective implementation of the aforementioned policies should be adopted2

Despite the importance of tourism for economic growth and social and regional development, the enhancement of tourism activity faces many challenges that at the same time they constitute large opportunities (World Tourism Organization 2015) On the one side, the tourism sector should take into account social challenges that influence the demand of tourism product On the other side, tourism should face the restrictions that are imposed by the structure of the tourism sector itself, the inherent characteristics and the socioeconomic framework A special emphasis should be put on the environmental consequences of the

tourism industry (Gössling 2002) so as to encourage the sustainable national and regional

development and not to inhibit this development

According to this line of thought, it should be emphasized that tourism is a complex product (Commission of the European Communities 2006) that depends on volatile or dynamic conditions of supply and demand It is noted that tourists choose tourist products according to supplied services and the local tourism entropy As a result, the prevailing types

of tourism are coastal, mountainous, sports, religious, thermal, gastronomic and cultural (Nelson 2013) Moreover, structural factors that affect the supply and demand of tourism product should be pointed out In addition, the behavior of tourists is particularly volatile and

is subject to psychological and social influences, personal peculiarities and short-term factors (Candela and Figini 2012)

Even though tourism constitutes one of the most basic economic activities in Europe, it should be emphasized that serious concerns have been expressed regarding quality, efficiency, competitiveness and sustainability of the European tourism sector (European Travel Commission 2012) Tourism in Europe is currently examined under the spectrum of current financial and economic crisis that has affected all economies since 2008 Consequently, the recent crisis has exerted a significant influence on the demand of the tourism product (World Tourism Organization and International Labour Organization 2013) Therefore, in the challenges of the tourism sector the recent financial and economic crisis should be added along with the accompanying economic stagnation that has affected the preferences of European tourists As a result, tourists choose less far destinations and at the same time have limited the duration and the cost of their residence (Eurostat 2008) The European tourism industry faces unprecedented challenges because of the increased competition created by emerging or developing countries that attract a significant number of tourists mainly due to the competitiveness of their tourism services At the same time, the prevailing inception is that tourism may be a victim of its success in these cases that tourism industry has not grown in a sustainable manner3 Biodiversity, ecosystem functioning and natural resources often threaten the uncontrollable tourism development These factors should not be ignored as they threaten the sustainability of tourism development (United Nations Environment Programme and World Tourism Organization 2005)

Based on the aforementioned analysis, the tourism sector should adopt new challenges Due to prevailing conditions, the existence and application of a coherent and coordinated framework of action at the European level is necessary so as to ensure the sustainability of

2

http://www.europarl.europa.eu/RegData/bibliotheque/briefing/2014/140749/LDM_BRI%282014%29140749_REV 1_EN.pdf

3

http://www2.unwto.org/

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European tourism (Commission of the European Communities 2007) As an activity that integrates cultural and natural inheritance, tourism combines economic development with sustainability The need to increase the attractiveness of local and regional communities acts

as an incentive for the adoption of sustainable and environmentally best practices at the European level

According to the aforementioned challenges and the increased competition facing tourism, Europe should offer sustainable and high quality tourism based on its comparative advantages, which are basically the diversity of natural environment and cultural wealth Besides, following the treaty of Lisbon the main aim of the European tourism policy is to enhance the competitiveness of the sector by ensuring its sustainable prospects of growth For this aim, economic, social and environmental sustainability are considered fundamental pillars for supporting and improving competitiveness in the host places of tourists, increasing the prosperity of people, reducing unemployment as well as maintaining and developing these natural and cultural poles of attraction (Commission of the European Communities 2003) In addition, within this framework of analysis the encouragement of inter-country collaboration

is encouraged and mainly at the level of best practice exchange In this way, Europe could remain a leading tourism destination at the global level As a result, the local economies might also develop, especially those associated with lower incomes per capita (European Parliament, 2008)

It should also be noted that the size and contribution of the tourism sector is not the same for each individual member country and region of Europe As a result, the systematic study of the spatial distribution of tourism activity in the map of Europe should also be accomplished Within this analytical framework, the current study aims to explore in a quantitative manner the countries and regions of Europe that are associated with high or low degrees of concentration of the tourism activity and as a result have developed (or they are in the process

of developing) a comparative advantage (or disadvantage) with respect to the rest European countries and regions

In this way, the areas of Europe for which the tourism sector is principal (“exporting”) are located Moreover, the geographic characteristics of these areas are explored (coastal, mountainous, urban etc.) so as to detect as well the specific type of tourism activity that they develop or are in the process of developing (summer, winter etc.) The study of the period 2008-2014 permits to detect possible shifts of the tourism activity due to the global economic crisis and the associated economic stagnation that possibly has changed the tourism map of Europe

The analysis of variables referring to real economy which takes place in this study contributes, among others, to the emphasis of real economy sizes, such as productive activity, employment and the associated support policies These variables have been neglected in relation to the attention that has been given by the dominant European Institutions to the financial aspect of the economy

Under this framework of analysis, the next section of the paper presents the data and methodology on which the results of the study are based, which are analyzed in section 3 Finally, section 4 presents the results of the study and some policy suggestions

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For our analytical purposes, statistical data concerning employment of the European Union and EFTA countries (henceforth named European Union) are used These data are available from Labor Force Statistics for the years 2008 and 2014 at the country level and for the years 2008 and 2012 at the regional level, so as to detect possible relevant differentiation during the period of economic crisis

As a basic indicator of our analysis the Location Quotient has been constructed and studied in a spatial-time dimension The first dimension refers to country level while the second dimension refers to regional level In both cases the relevant calculations have been estimated based on the total or aggregate of the European employment for the above-mentioned years

The calculation of the Location Quotient is based on the number of employees in the corresponding sectors of economic activity In particular, in the first application it measures the participation of a sector (for the purposes of our analysis the sector of tourism) in a country with the relevant participation of the sector for Europe as a whole The specific formula is given below:

If QL > 1, then the region participates in tourism activity at a greater percentage than it participates in the European Union as a whole That is, the examined spatial unit r presents greater development in the specific sector i in relation to the European Union as a whole

An Ain Ar Air

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If QL < 1, then the participation of the country or region in tourism activity is lower than

it participates in the European Union as a whole That is, the examined spatial unit r presents retardation in relation to the European Union as a whole

With the use of the above indicator it can be defined in many instances if a sector of an area is basic or no basic depending on whether its value is greater or lower than the unit respectively

It must be clarified that the tourism sector is expressed with the associated

“Accommodation and Food Service Activities” of the international classification of sectors of economic activity NACE 2 and the geographic classifications NUTS 1 and 2 Finally, thematic maps have been used for the schematization of countries/regions with intense activity in the sector of tourism

RESULTS OF THE ANALYSIS

From Table 1 it emerges that in the sector of accommodation and catering for the year

2008 very high indicator have the following countries: Malta, Cyprus, Spain, Greece, Portugal, Ireland and Austria At the European Union level as a whole the following countries are included: Hungary, Slovakia, United Kingdom and Luxembourg, while at very low levels Romania, Poland, Lithuania, Latvia and Scandinavian countries are integrated

Moreover, we observe that the evolution of the indicator for the year 2014 differs in comparison with the year 2008, which is a very important outcome In specific countries such

as Greece, Ireland, Spain and Iceland the value of the indicator increases significantly, in other it increases but not significantly, while in most countries it decreases or it remains constant

For the year 2014 major alterations in countries with the higher indicator have been noticed with Greece (1.97) and Spain (1.80) to be placed in the first and second position respectively Greece scoring almost two in the indicator presents double activity in the sector

of tourism in relation to European levels Cyprus (1.76) and Ireland (1.63) possess the third and fourth position respectively as far as the Coefficient of Participation is concerned, while Iceland and the United Kingdom increase significantly their tourism activity during the period 2008-14 Beyond the above-mentioned qualitative changes, the geographical pattern of the concentration of tourism activity in Europe does not change significantly as countries with relative development remain the Mediterranean countries (Table 2)

In maps 1 and 2 a classification of the E.U Countries according to their respective value

of the Location Quotient is depicted for the years 2008 and 2014 These maps show more clearly that the concentration of tourism activity in Europe has not changed significantly between the years 2008 and 2014 since the countries exhibiting relative development of tourism activity largely remain the Mediterranean countries

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Table 1 Location Quotient of European Union countries in the sector of tourism (accommodation and food service activities) for the years 2008 and 2014 in decreasing

order for the year 2008

Country of the

European Union

Coefficient of Participation 2008

UNIT_1_2_-1_2&rankName2=AGE_1_2_-1_2&rankName3=INDICATORS_1_2_-R2_1_2_-1_2&rankName7=TIME_1_0_0_0&rankName8=GEO_1_2_0_1&sortC=ASC_-

1_2&rankName4=SEX_1_2_-1_2&rankName5=DURATION_1_2_-1_2&rankName6=NACE-1_FIRST&rStp=&cStp=&rDCh=&cDCh=&rDM=true&cDM=true&footnes=false&empty=false&wai=false&time_mode=NONE&time_most_recent=false&lang=EN&cfo=%23%23%23%2C%23

%23%23.%23%23%23

Note: 2 Countries of EFTA are included as well (Iceland, Norway)

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R2_1_2_-1_2&rankName7=TIME_1_0_0_0&rankName8=GEO_1_2_0_1&sortC=ASC_-1_FIRST&rStp=&cStp=&rDCh=&cDCh=&rDM=true&cDM=true&footnes=false&empty=false&wai=false&time_mode=NONE&time_most_recent=false&lang=EN&cfo=%23%23%23%2C%23

1_2&rankName4=SEX_1_2_-1_2&rankName5=DURATION_1_2_-1_2&rankName6=NACE-%23%23.%23%23%23

Note: Countries of EFTA are included as well (Iceland, Norway, Switzerland)

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Map 1 Classification of the European Union Countries according to the Location Quotient in tourism sector (accommodation and food service activities) for the year 2008

Map 2 Classification of the European Union Countries according to the Location Quotient in tourism

sector (accommodation and food service activities) for the year 2014

At the level of great areas of Europe (NUTS 1 Level) the Aegean Islands, Canary Islands and Madeira gather accordingly triple activity in tourism in relation to the total of European Union (C.P > 3) followed by London, Brussels, and Westosterreich in Austria With high C.P follow regions in Greece and the United Kingdom (Table 3)

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1_2&rankName2=INDIC-SB_1_2_-1_2&rankName3=NACE-R2_1_2_-1_2&rankName4=

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