The Economics of Recreation, Leisure and Tourism This page intentionally left blank The Economics of Recreation, Leisure and Tourism John Tribe AMSTERDAM BOSTON HEIDELBERG LONDON NEW YORK OXFORD PARIS SAN DIEGO SAN FRANCISCO SINGAPORE SYDNEY TOKYO Elsevier Linacre House, Jordan Hill, Oxford OX2 8DP 30 Corporate Drive, Burlington MA 01803 First published 1995 Reprinted 1996, 1997, 1998 Second edition 1999 Reprinted 2000, 2001 Third edition 2004 Copyright © 2004, John Tribe. All rights reserved The right of John Tribe to be identified as the author of this work has been asserted in accordance with the Copyright, Designs and Patents Act 1988 No part of this publication may be reproduced in any material form (including photocopying or storing in any medium by electronic means and whether or not transiently or incidentally to some other use of this publication) without the written permission of the copyright holder except in accordance with the provisions of the Copyright, Designs and Patents Act 1988 or under the terms of a licence issued by the Copyright Licensing Agency Ltd, 90 Tottenham Court Road, London, England W1T 4LP. Applications for the copyright holder’s written permission to reproduce any part of this publication should be addressed to the publisher Permissions may be sought directly from Elsevier’s Science and Technology Rights Department in Oxford, UK: phone: (ϩ44) (0) 1865 843830; fax: (ϩ44) (0) 1865 853333; e-mail: [email protected]. You may also complete your request on-line via the Elsevier homepage (www.elsevier.com), by selecting ‘Customer Support’ and then ‘Obtaining Permissions’ British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloguing in Publication Data A catalogue record for this book is available from the Library of Congress ISBN 0 750 66180 1 For information on all Elsevier publications visit our website at: www.books.elsevier.com Printed and bound in Great Britain Contents Preface to the third edition vii Acknowledgements ix 1 Introduction 1 Part One Organizations and Markets 2 Recreation, leisure and tourism organizations 25 3 The market for recreation, leisure and tourism products 43 Part Two Further Issues of Demand and Supply 4 Demand: time preference, elasticity and forecasting 69 5 Supply and costs 88 Part Three Markets in Practice 6 Market structure and pricing 113 7 Market intervention 132 Part Four The External Operating Environment 8 The competitive, technological, political and socio-cultural environment 161 9 The economic environment 190 Part Five Investment 10 Investment in the private sector 217 11 Investment in the public sector 235 v GGGGG Contents Part Six Economic Impacts 12 Income, employment and prices 255 13 Economic development and regeneration 281 Part Seven The Global Economy 14 The balance of payments and exchange rates 307 15 Globalization 331 Part Eight Environmental Economics 16 Environmental impacts 355 17 Action for sustainability 378 18 Critique, alternative perspectives and change 404 References and further reading 430 Index 441 GGGGG vi Preface to the third edition Recreation, leisure and tourism continue to provide a fascinating field of study for economists. The first edition of this text was written just after a period of intense recession in the UK economy. The second edition was prepared during a period of growth in the economies of the UK, the USA and Europe. But elsewhere, the economies of Japan – the second largest in the world – Brazil, Russia, and what were once referred to as the Asian tiger economies had suffered decline. This third edition has been written in a period where the economic significance of China has continued to grow whilst the rest of the world economy has suffered a mixture of low growth and economic stagnation. Additionally, whilst the broad economic activity of recreation and leisure continues to grow, tourism suffered a severe shock in the wake of 9/11 and the war in Iraq. It is, of course, impossible to predict the economic conditions that will prevail in the year when, or the region where, this text will be read. But it is important to understand what has happened over the course of economic business cycles to prepare for what may happen in the future. The changes in fortunes of various economies are mapped out through the updated statistics which are a central feature of this third edition. The effects of these changes on the leisure sector are also evident in these statistics and more so in the many new and updated exhibits that illustrate the text. In some cases original exhibits have been retained so as to provide the reader with contrasting evidence and a sense of the dynamics of the econ- omy. In terms of geographical coverage, this text attempts to use examples from around the world to illustrate its points. The aim of this text remains that of offering those involved in the business of recreation, leisure and tourism an understanding of the practicalities of economics. To support this aim real-world examples continue to be empha- sized in this text rather than economic theory for theory’s sake. Thus in vii GGGGG Preface to the third edition contrast to general economics introductory texts, the marginal productiv- ity theory of labour theory is excluded, but pricing of externalities is included on the grounds that the latter is more useful to students of leisure and tourism than the former. The key themes of the book focus on a series of questions: • How is the provision of leisure and tourism determined? • Could it be provided in a different way? • How are organizations affected by the competitive and macro-economic environments? • What are the economic impacts of leisure and tourism? • What are the environmental impacts of leisure and tourism? • How can economics be used to manage leisure and tourism? The other key features of this text are: • Visual mapping of the content of each chapter. • Liberal use of press cuttings to illustrate points. • Chapter objectives. • Learning outcomes. • Key points summarized. • Data response questions. • Short answer questions. • Integrated case studies. • Useful web sites. The third edition also includes illustrations in each chapter, multiple choice questions at the end of each chapter and a set of PowerPoint slides available on the companion web site. It is hoped that this text will create a lasting interest in the economics of leisure and tourism and generate a spirit of critical enquiry into leisure and tourism issues affecting consumers, producers and hosts. John Tribe, 2004 GGGGG viii Acknowledgements The author would also like to thank students and colleagues at Buckinghamshire Chilterns University, (BCUC) and friends in the wider community of leisure and tourism academics who have assisted directly and indirectly in the preparation of this book. In particular, at BCUC, the Director, Professor Bryan Mogford and Assistant Director Gill Fisher and at Butterworth-Heinemann, Kathryn Grant and Sally North have each pro- vided much encouragement and support. ix GGGGG This page intentionally left blank CHAPTER •••• 1 Introduction Leisure Work Recreation Recreation Home-based Travel and away from recreation tourism home Unlimited wants Economics of leisure and tourism Scarce resources The Economics of Recreation, Leisure and Tourism Objectives and learning outcomes • How important are recreation, leisure and tourism to national economies? • Why do these industries provide so many new jobs? • What is the globalization of recreation and leisure? • Are recreation, leisure and tourism shares good investments? • Is the growth of recreation, leisure and tourism sustainable? This book will help you investigate these issues. The objectives of this chapter are to define and integrate the areas of study of this book. First the scope of recreation, leisure and tourism will be discussed, and second the scope and techniques of economics will be outlined. The final part of the chapter explains how the study area of recreation, leisure and tourism can be analysed using economic techniques. By studying this chapter students will be able to: • understand the scope of recreation, leisure and tourism and their interrelationship; • explain the basic economic concerns of scarcity, choice and opportunity costs; • outline the allocation of resources in different economic systems; • explain the methodology of economics; • understand the use of models in economics; • understand the use of economics to analyse issues in recreation, leisure and tourism; • access sources of information. Definition and scope of recreation, leisure and tourism Like all definitions, those pertaining to recreation, leisure and tourism encounter some problems. For example, a common element in many defin- itions of leisure is that of free time. Thus working, sleeping and house- hold chores are excluded. However, should we then include people who are sick or recovering from illness? Similarly, recreation is commonly applied to the pursuits that people undertake in their leisure time. But what about things people do to support their employment in their spare time? For example, is a computer programmer’s use of computers in non-working time a leisure activity? Similar questions arise in defining tourism. The common element in definitions of tourism is that of ‘temporary visiting’. Questions of scope immediately arise. Are people who are engaged in GGGGG 2 Introduction study overseas tourists? Are people travelling on business tourists? Aware of the problems involved, some working definitions of travel and tourism are now attempted. Working definitions • Leisure: discretionary time is the time remaining after working, com- muting, sleeping and doing necessary household and personal chores which can be used in a chosen way. • Recreation: pursuits undertaken in leisure time. Recreational pursuits include home-based activities such as reading and watching television, and those outside the home including sports, theatre, cinema and tourism. • Tourism: visiting for at least one night for leisure and holiday, business and professional or other tourism purposes.