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Tourism Impact on the Economic Development of the Republic of Armenia: Community-Based Tourism for Regional Development

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Tourism Impact on the Economic Development of the Republic of Armenia: Community-Based Tourism for Regional Development TOURISM IMPACT ON THE ECONOMIC DEVELOPMENT OF THE REPUBLIC OF ARMENIA: COMMUNITY-BASED TOURISM FOR REGIONAL DEVELOPMENT アルメニア共和国の経済開発における観光業の貢献 ―地域開発のためのコミュニティの観光業― Doctoral Thesis Submitted to Graduate School of Business Administration, Rikkyo University By Anna Davtyan Third Year Doctoral Student Student ID: 14WG004N Supervisor Ryuzo Kuroki 2016 Abstract Tourism industry has become one of the major industries as globally as well as a major sector for many countries, especially developing countries. Tourism is a rapidly growing industry in the Republic of Armenia, one of the former Soviet Union countries; the international visitors’ number reached 1 million 204 thousand in 2014 (from only 12 thousand in1995).The aim of this study is to analyze tourism industry of the Republic of Armenia, since it enhances the investment and profit growth in the industry, which can be seen only from the growing numbers of the hotels: in 2011 the total number of hotels in the country was 338, in 2015 it became 523. The first aim of the study is to analyze the role, position, effect of tourism on the country’s economy in national level. Community-based tourism has been promoted for assuring the social, environmental and economic development of local communities by their involvement in tourism activities. With respect to the increasing trends, the popularity of community-based type of tourism (CBT), where key actors of tourism activities are the community members and where tourists interact directly with locals. CBT can be used as an economy boosting tool for different countries (especially for developing ones), regions (remote areas), create better livelihood conditions for community members and be one of the bottom-up developing strategies for the counties. The second aim is to find out the role of tourism in regional level, and specifically the current state of CBT in the Republic of Armenia, community members involvement in tourism activities and decision making processes and to increase the willingness of CBT participation and decision making processes. The perceptions for CBT considerations as a tool for the country’s regional development since Armenian regions are less developed than the capital city. The country is reach with natural and cultural recourses, which are the main requirements for CBT. Both qualitative and quantitative methods have been used in the research. The literature related to the study area (academic books, journals, websites, and media), and projects have been used as qualitative methods. Various quantitative methods have been implemented in the study: ii The method of Input–Output (I-O) analysis has been used for finding out the benefits and importance of tourism industry in Armenia for the country’s economy, the interdependence of tourism and other sectors (agriculture, manufacturing and mining), the recent data of tourism industry trends and reasons for the changes: in particular, the I-O tables of Armenia for 2002 and 2006 have been analyzed, with the calculation of Output Multiplier, “Index of the Power of Dispersion” (IPD), “Index of the Sensitivity of Dispersion” (ISD), etc. Tourism Multiplier, Tourism Employment Multiplier and Specific Overnight Threshold (SOT) (the number of tourists visiting the destination over a year in relation to the number of population) have been used for finding the density of tourism in regions. Surveys/interviews have been conducted with the Armenian CBT entrepreneurs (small and medium CBT related business owners) to understand the current CBT picture in Armenia: the services provided within the framework of CBT, its issues and opportunities. In the scope of finding the cost efficient method to support CBT in regions, surveys with students of Armenian universities, colleges have also been conducted. This was done to find out their willingness to get internship in tourism industry; particularly in CBT planning process. Major findings: Tourism plays a key role in the economic development of Armenia, by taking into account the fact that it is not dependent on the import, it has high value of Output Multiplier, Tourism Multiplier, Tourism Employment Multiplier and the contribution of the tourism export (visitor export) to the total export is very large, especially when it is compared with other countries. But it is highly concentrated in the capital city, which means that all those effects are real in macro level, the tourism industry for the regions is still on a low level. CBT entrepreneurs consider CBT as a tool for the regional development, they are eager to cooperate and gain knowledge for better operations of their businesses. Besides, the CBT stakeholders’ willingness to learn and implement the gained knowledge in practice, there is a high willingness of students to get unpaid internship in tourism industry, which means that the knowledge gained from iii university education can be passed to the CBT participants without any huge investments/expenses, which in its turn will lead to the CBT, regional and overall country development. Based on earlier studies and research findings possible model suggestion for CBT development. Acknowledgement I wish to express my sincere gratitude to many people, who supported me in writing this dissertation. First of all, I would like to express my gratitude to my supervisor Ryuzo Kuroki for his continuous guidance, patience and support throughout this research. I would also like to express my gratitude to the dean of Graduate School of Business Administration Masato Kamekawa for his support and kindness, and Professor Takayuky Shoji for his comments and feedbacks. I would like to extend my sincerest thanks and appreciation to the faculty staff of Graduate School of Business Administration of Rikkyo University for the academic support and encouragement. I am very grateful to my MA supervisor Satoru Ukita (Graduate School of Economics, Tokyo International University), without his support and courage I would not reached all my achievements. Survey conducting has become a reality only with the help of my Ex-coworkers Vladimir Oboyancev, Aida Martirosyan, Arevik Petrosyan (the head of Tourism Department of the Minitry of Economics), Ruzan Khojikyan(JICA Armenia coordinator), Garnik Manukyan (JICA Project of "Development of Local Production and Promotion of Local Brands in Armenia" Coordinator),Narek Seyranyan, Gardman Tour. I especially appreciate Dr. Pradit Withisuphakorn’s and Dr. Rujira Peasai’s help and support (National Institute of Development Administration of Thailand), for conducting case study in Thailand, which gave a better and deeper understanding of community based tourism. I also want to express my gratitude towards my family members from senior to junior, to my lovely parents David Davtyan and Svetlana Gevorgyan, my brother Gor Davtyan and my sister-in-law Astghik Chakhmakhchyan, their children David, Tatev and Arev Davtyans, to all my friends from the entire world, for their continues support troughout my study, especially to my friends Nora Gevorgyan, Sona Shahgeldyan, Ani Gyurjinyan, Parvize Yakubov and Kwame Bediako. iv Special thanks to Ikenna Chigbo for support and encouragement throughout my study. v TABLE OF CONTENT ABSTRATC ii ACKNOWLEDGEMENT iv TABLE OF CONTENT vi LIST OF TABLES xi LIST OF FIGURES xiv LIST OF ABBREVIATIONS xvi CHAPTER 1: INTRODUCTION 1.1 Background 1 1.2 Problem of Statement 5 1.3 Objectives of the Study 5 1.4 Hypothesis of the Study 6 1.5 Study Area /Republic of Armenia 6 1.5.1 Some Facts about Armenia 8 1.6 Structure of Thesis 10 CHAPTER 2: BACHGROUND/LITERATURE REVIEW 2.1 Defining Tourists, Tourism 13 2.1.1 Tourist, Tourism 13 Motivation of Travelling and the Types of Tourism/Tourism 2.2 Products 19 2.3 Tourism Products/Types of Tourism 22 2.3.1 Cultural Tourism 23 2.3.2 City Tourism and Culture 23 2.3.3 River Tourism 24 2.3.4 Cruise Tourism 24 2.3.5 River Cruise Tours 25 2.3.6 Heritage Tourism 25 vi 2.3.7 Event tourism 26 2.3.8 Festivals 27 2.3.9 Fair Trade 28 2.4 Effects, Impacts of Tourism 29 2.4.1 Economic Impacts of Tourism 30 2.4.2 Environmental Impacts of Tourism 37 2.4.3 Socio-Cultural Impacts of Tourism 40 2.5 Tourism Polices 43 2.6 Role of Marketing/Advertisement in Tourism 47 CHAPTER 3: REPUBLIC OF ARMENIA:TOURISM INDUSTRY 3.1 Republic of Armenia 49 3.1.1 Economy 49 3.1.2 Demographics 56 3.1.3 Infrastructure 56 3.1.3.1 Road Transport 56 3.1.3.2 Railway Transport 55 3.1.3.3 Airports 57 3.2 Armenian Tourism Sector Outlook 59 3.2.1 Policy Perspectives 61 3.2.2. Tax Law/Rate 62 3.2.3 Facts and Figures 63 3.2.4 Domestic tourism 76 CHAPTER 4 : ECONOMIC IMPACT OF TOURISM: REPUBLIC OF ARMENIA(NATIONAL LEVEL) 4.1 Measuring the Impact of Tourism 77 4.1.1 Visitor Consumption and Visitor Consumption Expenditure (receipts) 81 vii 4.2 Methods of Tourism Economic Impact Measurement 83 4.2.1. Tourism Satellite Account (TSA) 83 4.2.2. Multiplier 87 4.2.2. 1 Tourism/ Ratio Multiplier 93 4.2.3 Money Generation Model (MGM) or Defining the Economic Impact of Tourism 94 4.2.4 Inputs-Output (I-O) Analysis 96 4.2.4.1 Input-Output Analysis: Key Sectors 98 4.2.4.2 Studies of Analyzing Economic Impact of Tourism Industry 100 4.2.4.3 Advantages of I-O analysis 102 4.2.4.4 Limitations of I-O analysis 102 4.2.4.5 Analytical Tools 103 4.3 Data Overview and Methodology 109 4.4 Result and Discussion 110 4.4.1 Input-Output Table Analysis Result/ Discussion 110 4.4.2Japanese I-O Table Analysis 121 4.4.2Multipliers 123 CHAPTER 5 : TOURISM’S REGIONAL IMPACT 5. 1 Specific Overnights Threshold (SOT) 126 5.1.1 Result of SOT 128 The Types of Tourism Where Community Members Key 5.2 Actors 130 5.2.1 Agri-tourism 135 5.2.2 Ecotourism 136 5.2.3 Homestay Tourism 140 viii 5.3 Homestay, CBT, Eco-Tourism Programs/Projects 142 5.3.1 Homestay in Sri Lanka 142 5.3.2 Homestay Program in Malaysia 144 5.3.3 CBT, Homestay and Eco-Tourism Programs in Thailand 146 5.4 CBT Enterprises 151 5.
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