View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by Diposit Digital de la Universitat de Barcelona Institut de Recerca en Economia Aplicada Regional i Pública Document de Treball 2011/06, 33 pàg Research Institute of Applied Economics Working Paper 2011/06, 33 pag. “How Important to a City Are Tourists and Daytrippers? The Economic Impact of Tourism on The City of Barcelona” Joaquim Murillo, Esther Vayá, Javier Romani and Jordi Suriñach AQR-IREA Universitat de Barcelona Institut de Recerca en Economia Aplicada Regional i Pública Document de Treball 2011/06 pàg. 2 Research Institute of Applied Economics Working Paper 2011/06 pag. 2 WEBSITE: www.ub.edu/irea/ • CONTACT: [email protected] The Research Institute of Applied Economics (IREA) in Barcelona was founded in 2005, as a research institute in applied economics. Three consolidated research groups make up the institute: AQR, RISK and GiM, and a large number of members are involved in the Institute. IREA focuses on four priority lines of investigation: (i) the quantitative study of regional and urban economic activity and analysis of regional and local economic policies, (ii) study of public economic activity in markets, particularly in the fields of empirical evaluation of privatization, the regulation and competition in the markets of public services using state of industrial economy, (iii) risk analysis in finance and insurance, and (iv) the development of micro and macro econometrics applied for the analysis of economic activity, particularly for quantitative evaluation of public policies. IREA Working Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. For that reason, IREA Working Papers may not be reproduced or distributed without the written consent of the author. A revised version may be available directly from the author. Any opinions expressed here are those of the author(s) and not those of IREA. Research published in this series may include views on policy, but the institute itself takes no institutional policy positions. Institut de Recerca en Economia Aplicada Regional i Pública Document de Treball 2011/06 pàg. 3 Research Institute of Applied Economics Working Paper 2011/06 pag. 3 Abstract In this paper, we devise a methodology that is able to objectively quantify the impact of tourism on the urban economy. This methodology takes various dimensions into account. First, to analyse the impact at sectoral level, it should bear in mind that tourism is a "cross-sectional" activity which affects many sectors, both directly and indirectly. Therefore, it is important to consider the impact of urban tourism on sectors traditionally defined as "tourism-related" (that is, hotels, restaurants, shops, etc.) but also its impact on other sectors (for instance, textiles, food, construction, to name only a few) due to the intersectoral relationships that emerge. Second, we need to calculate the percentage of the turnover of each sector that is due to the tourism industry. Third, it is important to establish the geographic distribution of this impact: how is the effect shared between the city and its neighbouring areas? Finally, the effect of urban tourism should be quantified not only in terms of turnover, but also in terms of its contribution to GDP and employment. JEL classification: . Keywords:. L83 - Sports; Gambling; Recreation; Tourism; D57 - Input–Output Tables and Analysis; D61 - Allocative Efficiency; Cost–Benefit Analysis Joaquim Murillo is Associate Professor at Universitat de Barcelona. Department of Econometrics, Statistics and Spanish Economy. AQR-IREA. E-mail: [email protected]. Ester Vayà is Associate Professor at Universitat de Barcelona. Department of Econometrics, Statistics and Spanish Economy. AQR-IREA. E-mai:l: [email protected]. Javier Romaní is Associate Professor at Universitat de Barcelona. Department of Econometrics, Statistics and Spanish Economy. AQR-IREA. E-mail: [email protected]. Jordi Suriñach is Full Professor at Universitat de Barcelona. Department of Econometrics, Statistics and Spanish Economy. AQR-IREA. E-mail: [email protected]. Acknowledgements: The authors wish to thank the Barcelona Tourism Strategic Plan 2015 for their cooperation in this study. The data and results are the sole responsibility of the authors. The authors also acknowledge funding from the CICYT project ECO2009-12 678 and SEJ2007-67767-C04-02 from MCI and FEDER. Institut de Recerca en Economia Aplicada Regional i Pública Document de Treball 2011/06 pàg. 4 Research Institute of Applied Economics Working Paper 2011/06 pag. 4 1.- Introduction Although urban tourism is probably one of the oldest forms of leisure travel1, it was only during the last decades of the twentieth century that many cities really became aware of its economic potential and embraced it as a key sector inside their economies. Today, urban tourism is one of the most dynamic segments within the travel industry: in 1999, the Global Development Research Center predicted that the number of international visitors to cities worldwide would triple by 2020, reaching a figure of 1.6 bn foreign visitors alongside a similar number of domestic visitors. The Barcelona Metropolitan region2 offers a clear example of this trend: while the total overnight stays in Catalonia as a whole increased steadily throughout the decade, the Barcelona region’s share rose from 22.7% in 1999 to 30.7% in 20093. In 2009, the total number of overnight hotel stays in Barcelona stood at almost twelve and a half million, placing the city at the same level as other major tourist destinations such as London, Paris and Rome (Office du Tourisme et des Congrès de Paris, 2010). Clearly, the ability to attract visitors has a significant effect on the economy of tourist cities. However, the desirability of tourism may be less obvious to the city’s residents, or even to economic policy makers. Indeed, a significant segment of the population living in tourist cities see visitors as a nuisance. We find examples of this reaction in the complaints of tourist saturation in certain neighbourhoods in Barcelona4, protests about the interference of visitors in everyday life in New York5, or the contemptuous manner with which many Parisians treat tourists, which has created what is known as the "Paris Syndrome" (Katada, 1998; Uria, 2006; Wyatt, 2006). As the saying goes, a picture paints a thousand words; the anonymous artist who drew a line down a New York pavement to create one walking lane for tourists and another for New Yorkers made the point particularly well6. Any study of the effect of tourism on cities should bear this fact in mind: that is, that a sizeable proportion of the residents of major tourist destinations are far more aware of the inconvenience 1 As early as the seventeenth century, it was common for young aristocrats in many European countries (especially the English) to undertake a long journey, known as the Grand Tour, through the major cities of Europe (Gross, 2008). 2 The region comprises the city of Barcelona and the four neighbouring towns of Badalona, L'Hospitalet de Llobregat, Sant Adrià de Besòs and Santa Coloma de Gramenet, with a total population of 2,251,600 inhabitants in 2009. 3 In the municipality of Barcelona alone, total overnight stays in hotels increased from 8,351,818 in the year 2000 to 12,311,976 in 2009 (source: the National Statistics Institute). 4 La Vanguardia (Catalonia’s most read daily newspaper), reported these complaints in articles published on June 16, 2008, April 9, 2009, May 5, 2009, June 7, 2009 and May 8, 2010. 5 CBS, April 22, 2010, Chelsea Now, November 19, 2009, New York Times, July 6, 2010, to cite a few examples. 6 New York News and Features, May 20, 2010, http://nymag.com/daily/intel/2010/05/tourist_sidewalk_lanes_actuall.html Institut de Recerca en Economia Aplicada Regional i Pública Document de Treball 2011/06 pàg. 5 Research Institute of Applied Economics Working Paper 2011/06 pag. 5 generated by tourism than of the benefits7. Other important points that should be reflected in the study methodology are the fact that urban tourism represents an increasing share of the tourist industry worldwide, and that major cities and metropolitan areas are becoming ever more dominant in the global economy8. So we need to devise a methodology that is able to objectively quantify the impact of tourism on the urban economy. This methodology should take various dimensions into account. First, to analyse the impact at sectoral level, it should bear in mind that tourism is a "cross-sectional" activity which affects many sectors, both directly and indirectly. Therefore, it is important to consider the impact of urban tourism on sectors traditionally defined as "tourism-related" (that is, hotels, restaurants, shops, etc.) but also its impact on other sectors (for instance, textiles, food, construction, to name only a few) due to the intersectoral relationships that emerge. Second, we need to calculate the percentage of the turnover of each sector that is due to the tourism industry. Third, it is important to establish the geographic distribution of this impact: how is the effect shared between the city and its neighbouring areas? Finally, the effect of urban tourism should be quantified not only in terms of turnover, but also in terms of its contribution to GDP and employment. This article aims to provide answers to all these questions. We present our methodology for quantifying the economic impact of tourism on the city of Barcelona, one of the world’s most popular urban tourism destinations, in 2009. In our preparation of the study we considered the various methodological approaches9 used in previous research aiming to calculate the economic impact of urban tourism. Based on these approaches, though bearing in mind that all cities and urban systems10 have idiosyncratic features of their own, we designed a methodology able to quantify the tangible economic effects of urban tourism but also versatile enough to adapt to plural urban environments.