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Economic impact of tourism on Wales
Economicimpactof tourism on Wales StephenF. Witt The economic impact of tourism on Wales is compared with that on the UK as a whole. Tourism sustains 10% of total employment in Wales compared with 6% in the UK, and tourism receipts as a percentage of GDP are also higher in Wales. International tourism receipts as a percentage of GDP in Wales are at about the same level as in Spain and Greece. Promotional activity should be directed at generating more visits to Wales by high-spending tourists in order to maximize the economic benefits of tourism, and to attract the growth segments of the tourism market to Wales. Keywords: pact
Wales; tourism; economic im-
Stephen Witt is Lecturer in Econometrics University of Bradford Management Centre. Emm Lane. Bradford. West Yorkshire iD9 4JL, UK.’
at the
Acknowledgement An earlier version of this paper was presented at an Agricultural Economics/ Agricultural Marketing Department Seminar, University College of Wales, Aberystwyth, Wales, UK, April 1986. The author would like to thank participants for their helpful comments. The author is also most grateful to the Research Services Unit of the Wales Tourist Board for the provision of information. ‘See World Tourism Organization, Yearbook of Tourism Statistics, WTO, Madrid, 1986; and World Tourism Organization, The World Tourism Organization in 1984, WTO, Madrid, 1985. ‘See also V.T.C. Middleton, Tourism in Wales: An Overview, Wales Tourist Board, Cardiff, 1980; V.T.C. Middleton, ‘England and Wales’, International Tourism Reports, No 2, 1986, pp 5-26; V.T.C. Middleton, ‘Marketing Holidays to Wales: Responding to Market Changes’, Tourist Review, Vol 42, No 2, April/June 1987, pp 27-30; and D.E.L. Thomas, ‘Tourism in the UK - an industry riding on the exchange rate’, Service Industries Journal, continued on page 308
306
Tourism is a massive industry worldwide and is growing. The current annual level of international tourist arrivals (340 million) is about four times that of the early 196Os, and the current annual level of international tourist receipts (US $115 000 million) represents about 5% of the total value of international trade. Domestic tourism is currently estimated to comprise 3500 million trips.’ Within this context it is interesting to examine the international and domestic tourism markets in Wales, and in particular to compare the impact of tourism on the economy of Wales with that on the UK economy as a whole.* Tourism can benefit a host country in various ways including the generation of income and employment.3 With regard to income, in 1985 in Wales British tourists staying at least one night spent f500 million and overseas tourists staying at least one night spent 2100 million. In 1984 day visitors spent about f300 million. Total visitor spending in Wales is thus of the order of $900 million. With regard to employment, tourism sustains, directly or indirectly, over 90 000 full-time job equivalents in Wales. The number of people who owe their livelihoods to tourism represents about 10% of total employment in Wales (the comparable UK figure is 6%). An advantage with tourism is that it is relatively labour intensive compared to other industries. A further benefit of tourism is that it contributes to the financial viability of a wide range of services and amenities which can also be used by local residents, for example restaurants, hotels, theatres, cinemas, public transport and sports facilities. In addition, visits to tourist attractions can contribute to the conservation of areas of scenic value, historical buildings, and so on. Tourism can also result in the continued existence of traditional occupations, for example handicraft industries and farming. Farmers can gain extra income by providing tourist facilities, and at the present time 6000 Welsh farmers are involved in tourism with 1300 farms providing serviced accommodation.4 The natural resources of Wales represent a major strength of its tourism product (see Figure l), eg the long coastline and plentiful beaches, countryside, forests, mountains and national parks all attract tourists.
Domestic and foreign inward tourism Magnitude
and growth
Table 1 shows the total number of trips of at least one overnight stay by British residents within Britain over the period 1975-85, and also the
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Economic impact of tourism on Wales Table 1. Visits and expenditure by British tourists wtthln grttaln.
Notes: aOnly visits of at least one overnight stay. bRefers to % change with respect to previous year. Source: British Tourist Authority, British Tourism Survey (Month/y), BTA. London, various issues.
continued from page 306 Vol6, No 3, November 1986, pp 399-416. 3For further discussion see B. Archer, ‘Tourism and the British economy’, Rivisfa lnternazionale di Scienze Economiche e Commerciafi, No 31, July 1984, pp 596 612; B.S. Duffield and J. Long, ‘The role of tourism in the economy of Scotland’, Tourism Management, Vol5, No 4, December 1984, pp 256-268; and R.A. Henderson, Recent Trends in Tourism and the Economic Impact of Tourists in Scotland, Economic and Statistics Unit Discussion Paper No 15, Scottish Economic Planning Department, Edinburgh, 1982. ‘Tourism is not always regarded as beneficial, eg it can have a negative social and ecological impact. See P.J. Sheldon and T.Var, ‘Resident attitudes to tourism in North Wales’, Tourism Management, Vol 5, No 1, March 1984, pp 4G47.
Year
Visita? (X 106)
% changeb
Expendlture % changeb (f x lb current prices)
Expenditure % chang& (f x 106 1080 prices)
1975 1976 1977 1978 1979 1980 1981 1982 1983
117 121 121 119 118 130 126 123 131 140 126
2.6 3.4 0.0 - 1.8 - 0.8 10.2 - 3.1 - 2.4 6.5 6.9 -10.0
2150 2400 2625 3100 3800 4550 4600 4500 5350 5975 6315
4500 4375 4100 4200 4500 4550 4075 3650 4075 4275 4205
19.4 11.8 9.4 18.1 22.6 19.7 1.1 - 2.2 18.9 11.7 5.7
0.0 -
2.8 6.3 2.4 7.1 1.1 -10.4 -10.4 11.6 4.9 - 1.6
corresponding expenditure figures. The visit data and the expenditure figures in terms of 1980 prices were both at about the same level in 1985 as in 1975. Table 2 gives the total number of overseas visits to the UK (including day-trips) over the same period, together with the expenditure figures. In contrast to the static picture for domestic tourism presented in Table 1, Table 2 indicates that foreign inward tourism grew by 53% in terms of visits between 1975 and 1985, and by 42% in terms of real expenditure. Furthermore, although overseas visits to the UK in 1985 were only at the level of 11% of domestic trips, expenditure by overseas visitors to the UK was at the level of 86% of domestic expenditure. Hence, foreign inward tourism is almost as important as domestic tourism in terms of the impact on the UK economy. Statistics relating to the magnitude and growth of domestic and foreign inward tourism in Wales are presented in Tables 3 and 4. Table 3 shows the total number of trips of at least one overnight stay by British residents within Wales over the period 1975-85, and the corresponding Table 2. Visits to and expenditure in the UK by overseas visitors.
Notes: “Includes day-trips. “Refers to % change with respect to previous year. SLWCe: Business Statistics Office (BSO), Business Monitor MQ6 Quarter 4 1986, HMSO, London, 1987.
Year
Visit@ (x 103)
% changeb
% changeb Expenditure (f x IO@current prices)
1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985
9 490 10808 12 281 12646 12486 12421 11 452 11 636 12464 13644 14 483
11.1 13.9 13.6 3.0 - 1.3 - 0.5 - 7.8 1.6 7.1 9.5 6.1
1218 1768 2352 2507 2797 2981 2970 3188 4003 4614 5451
Table 3. Visits and expenditure
Notes: *Only visits of at least one overnightstay. bReffers to % change with respect to previous year. Source: British Tourist Authorii. British Tourism Survey (Month/y), BTA, London, various issues.
308
11 11 12 12 11 13 11 12 12 12 11
200 250 275 325 350 450 425 425 450 530 500
2560 3218 3681 3410 3310 2961 2628 2582 3051 3296 3629
35.8 45.2 33.0 6.6 11.6 5.9 0.3 7.3 25.6 15.3 18.1
14.2 25.7 14.4 - 7.4 - 2.9 -10.5 -11.2 - 1.8 18.2 8.0 10.1
by British tourists within Wales.
Expenditure (f x Id current prices) 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985
Expenditure % changeb (f x 106 1980 prices)
% changeb
0.0 25.0 10.0 18.2 7.7 28.6 - 5.6 0.0 5.9 17.8 - 5.7
TOURISM
Expenditure (f x lo6 1980 prices)
% chang&’
425 450 425 450 425 450 375 350 350 380 335
-15.0 5.9 - 5.6 5.9 - 5.6 5.9 -16.7 - 6.7 0.0 8.6 -11.8
MANAGEMENT
December 1987
Economic Notes:
*Only visits of at least one overnightstay. bRefersto % change with respect to previous year. cFigures for previous years not strictly comparable. Source:
Wales Tourist Board, Tourism in Wales: Volume and Value, WTB, Cardiff, July 1987.
Notes:
“Figures for the UK appear in brackets alongside those for Wales. bWelsh data derives only from trips of at least one overnight stay. ‘UK data derives only from trips of at least one overnight stay for British tourists but includes receipts from day-trips by overseas visitors; for domestic tourism refers to Britain onlv. Sources:
Central Statistics Office (CSO), Regional Trends London, 1987; British Tourist AuthorTourism Survey (Monthly), London, various issues; B80, Business Monitor MO6 Quarter 4 WW, HMSO, London, 1987; and Wales Tourist Board, Tourism in Wales:Volume and Value, WTB, Cardiff, July 1987.
22. HMO, ity, British
impact
of tourism
on wales
Table 4. Visits to and expenditure In Wales by overseas ViSftorS.
Visitsa
Year
% changeb
Expenditure (f x 10’ current prices)
Expenditure (f x 106 1980 prices)
_c 10.0 15.9 12.7 0.9
50 50 75 85 95
45 40 55 60 65
(x 103 400 440 510 575 580
1981 1982 1983 1984 1985
Table 5. Tote1 tourism receipts as % of GDP in Wales and the UK.” Tourism receipts& (current prices)
Year
1981 1982 1983 1984 1985
Total (f x t06)
Per capita (f)
475 475 525 615 595
169 (134) 169 (137) 187 (166) 219 (188) 211 (208)
(7575) (7 700) (9 350) (10 600) (11 765)
GDP (f x IO’) (current prices)
Tourism receipts as % of GDP
8 727 9 674 IO 640 11 010 12 680
5.4 4.9 4.9 5.6 4.7
(216 988) (237 138) (259 229) (280 129) (305 741)
(3.5) (3.2) (3.6) (3.8) (3.8)
expenditure data. Again the level of visits is fairly static, but in this case expenditure in 1980 prices declined by 21% between 197.5 and 1985. Data on the number of overseas visits to Wales incorporating at least one night’s stay are presented in Table 4, together with the expenditure figures. Only the figures for 1981-85 are given. Direct comparisons of these data with the corresponding values for earlier years are not possible owing to changes in the method of data collection. It can be seen that substantial growth in overseas tourism to Wales took place over the period considered - between 1981 and 1985 the number of visits increased by 45% and real expenditure by 44%. In spite of the decline in British tourists’ real expenditure and the growth in overseas tourists’ real expenditure, by 1985 overseas tourists’ expenditure in Wales was still only at the level of 19% of British tourists’ expenditure in Wales. The British tourist therefore still has a far greater impact on the economy of Wales than the overseas visitor. In fact, overseas tourism plays a substantially greater relative role in Scotland. In 1985 the ratio of overseas tourists’ expenditure in Scotland to British tourists’ expenditure in Scotland was 29%, compared with the corresponding figure for Wales of 19%.”
Tourism receipts as percentage of GDP
5Data relating to Scotland were obtained from J. Stuart, ‘Tourism in Scotland under new management’, Tourism Management, Vol7, No 4, December 1986, pp 298-301. ‘Corresponding values for Eastern European countries are given in P.J. Buckley and S.F. Witt, ‘The international tourism market in Eastern Europe’, Service Indusfries Journa/, Vol 7, No 1, January 1987, pp 91-104.
Data on tourism receipts for the period 1981-85 are shown in Table 5. In each year, both tourism receipts per capita and tourism receipts as a percentage of gross domestic product (GDP) were higher in Wales than in the UK, thus demonstrating the relatively greater importance attaching to the role of tourism in the Welsh economy compared with the UK economy. Tourism receipts are 4.5%-5.5% of GDP in Wales as opposed to 3%-4% of GDP in the UK. Table 6 illustrates the importance of international tourism receipts as a percentage of GDP for selected European countries.‘j In the case of Wales this now includes receipts from England and Scotland. It can be seen that Austria takes on the highest value (about 7.5% in 1985), followed by Spain, Greece and Wales (4%-5%). For the UK, international tourism receipts are about lS%-2% of GDP, substantially lower than the value for Switzerland but double the value for FR Germany. The fact that Wales is on a par with Spain and Greece in
TOURISM MANAGEMENT December 1987
309
Economicimpactof tourismon Wales Notes: alncludes receipts from England and Scotland bNew series from 1984. ‘Fiaures not available.
Table 6. International countries 1981-1985.
tourism
So&es: CSO, Regional Trends 22, HMSO, London, UK, 1987; British Tourist Authority, British Tourism London, UK, various issues; Survey (Month/y), BSO, Business Monitor MQ6 Quarter 4 1986, HMSO, London, UK, 1987; Wales Tourist Board, Tourism in Wales: Volume and Value, Cardiff. Wales, UK, July 1987; P.J. Buckley and SF. Witt, ‘The international tourism market in Eastern Europe’, Service industries Journal, Vol 7, No 1, January 1987, pp 91-104; Wales Tourist Board; International Monetary Fund, international Financial Statistics. IMF. June 1987: and World Tourism Organization, Yearbook of Tourism SlaCstics, WTO, Madrid, 1986.
receipts
as % of GDP - comparison
Tourism receipts/GDP
of various
European
(%)
Country
Wales? UK Austria FR Germany Greece Spain Switzerland Turkeyb
1981
1982
1983
1984
1985
4.5 1.4 8.6 0.9 5.1 3.6 3.2 0.7
4.4 1.3 a.5 0.8 4.0 3.9 3.1 0.7
4.4 1.5 7.6 0.8 3.4 4.3 3.3 0.8
4.9 1.6 7.8 0.9 3.9 4.8
4.2 1 .a 7.6 0.9 4.3 _c
3.5 3.7
3.4 _c
terms of international tourist receipts in relation to GDP is a clear indication of the importance of tourism to the economy of Wales. Tourism receipts include expenditure on imported gooas and services, and taxes on expenditure. Hence the value of tourism receipts expressed as a percentage of GDP overstates somewhat the contribution of tourism to GDP. Bearing this limitation in mind, Table 7 gives a comparison of tourism receipts as a percentage of GDP with the contribution to GDP of selected industry groups in Wales. Manufucturing is the industry group which makes by far the largest contribution to GDP in Wales (24% in 198.5). Energy and water supply comes next with 13%, and this is followed by financial and business services, etc which contributed 9% to GDP in 1985, at least double the contribution of tourism. The contribution to GDP of construction also exceeds that of tourism whereas the contribution of agriculture, forestry and fishing is probably slightly less than that of tourism.
Contribution
of tourism to employment
Tourism is a relatively labour intensive industry and therefore expansion of the industry is a sensible route to follow in order to create new jobs. It is also a highly cost-effective strategy, as the average cost to public funds of creating one full-time job in tourism is substantially lower than in most other industries. Furthermore, the jobs created by tourism are spread throughout Wales rather than just being concentrated in urban centres, so tourism helps to counteract the movement from rural to urban areas. Tourism expenditure in Wales creates further rounds of economic activity and therefore the multiplier effect needs to be considered. Direct expenditure by tourists accrues to hoteliers, public house owners, restaurant owners, shop-keepers, and owners of other tourist facilities. Indirect expenditure comprises the successive rounds of inter-business transactions resulting from the direct expenditure, eg purchases of food by restaurant owners from suppliers. Induced expenditure is the Table 7. Contribution to GDP of selected industry groups in Wales 1961-1985. Contribution to GDP (%) Industry group 1981
1982
1983
1984
1985
4.1 10.1 22.6 7.1 7.9 5.4
4.1 10.1 23.0 6.8 7.7 4.9
3.1 12.7 23.2 6.7 8.1 4.9
3.7 a.5 24.6 7.0 9.0 5.6
3.1 12.9 23.9 6.6 9.1 4.7
Note: aBanking, finance, insurance, business services and leasing. Sources:
Agriculture, forestry and fishing Energy and water supply
CSO, Regional Trends, HMSO, London, 1986 and 1987; and Wales Tourist Board, Tourism in Wales: Volume and Value, WTB. Cardiff, July 1987.
Manufacturing Construction Financial and business services, etca Tourism receipts as % of GDP
310
TOURISM
MANAGEMENT
December
1987
Economic
impact of tourism on Wales
increased consumer expenditure which takes place as a result of the extra personal income generated by tourism expenditure, eg waiters’ spending on goods and services. The multiplier effect diminishes with successive rounds of spending as a result of ‘leakages’, eg goods and services imported into Wales. The various forms of tourism-related expenditure generate employment in the economy - direct employment is created by direct expenditure and secondary employment by indirect and induced expenditure.’ It is estimated that tourism currently sustains over 90 000 full-time job equivalents in Wales. No detailed survey has been carried out recently the most up-to-date breakdown of figures relates to 1974, and this is shown in Table 8. The data in this Table appear in a study by Archer and Shea in which tourism-generated employment is examined. Direct and secondary employment resulting from tourist expenditure in Wales are calculated by injecting tourism expenditure into an input&output model of the economy of Wa1es.s It can be seen that of the 83 100 full-time job equivalents due to tourism, 27 500 (33%) were in the accommodation sector.
Characteristics
7For further discussion of tourism multipliers see, eg, World Tourism Organization and Horwath and Horwath International, Tourism Multipliers Explained, WTO, London, 1981; B.H. Archer, ‘The anatomy of a multiplier’, Regional Studies, Vol 10, No 1, 1976, pp 71-77; M. Brownrigg and M.A. Greig, ‘Differential multipliers for tourism’, Scottish Journal of Political Economy, Vol 22, No 3, November 1975, pp 261-275; and M. Hanna, Tourism Multipliers in Britain, English Tourist Board, London, 1976. ‘B.H. Archer and S. Shea, Manpower in Tourism: The Situation in Wales, Wales Tourist Board, Cardiff, 1977. A description of the input-output model used is given in Appendix 2.
of incoming tourists
Statistics concerning the British visitor to Wales are presented in Table 9. The breakdown of trips by purpose of visit shows that most tourists are holidaymakers (58% in 1985), followed by people visiting friends and relatives (16%), and tourists combining a holiday with visiting friends and relatives (11%). Business/conference tourism only accounted for 10% of trips. When these figures are examined in conjunction with those relating to the breakdown of expenditure by purpose of visit, it can be seen that holidaymakers spend above average (58% of trips but 74% of expenditure in 1985) as do business/conference tourists (10% of trips but 13% of expenditure). By contrast those tourists who visit friends and relatives spend less than average. Visits to friends and relatives comprised 27% of trips to Wales in 1985 (including the category who also took a holiday), but this group of tourists was only responsible for 11% of expenditure. Clearly, particular effort should be directed towards encouraging the British holidaymaker and business/ conference tourist to visit Wales. The tourist visiting friends and relatives yields little economic benefit. The data in Table 9 relating to the breakdown of trips by duration of trip show that the majority of visits to Wales are short breaks (holidays of one to four nights accounted for 60% of the total in 1985). One-week
Table 8. Employment generated by tourism in Wales, June 1974. Employment Total full time job equivalents (including secondary
effects)
83 100 Directly in accommodation
Source: B. Archer and S. Shea, Manpower in Tourism: The Situation in Wales, WTB, Cardiff, 1977.
TOURISM
MANAGEMENT
Full time job equivalents Number of persons employed in: hotels and guest houses bed and breakfast establishments caravan and camping sites furnished accommodation units Total no of persons employed
December 1987
sector
27 500 25 2 5 2 35
400 100 700 000 200
311
Economic
impact of tourism on Wales Table 9. British Holiday
Note: aVFR denotes visits to friends and relatives. Source: British Tourist Authority, British Tourism Survey (Monthly), BTA, London, various issues.
visitors
to Wales.
attribute
Year
Purpose of visit breakdown of trips for (%) Holidav Holiday and VF!? VFRa Business/conference Other Purpose of visit breakdown of expenditure (%) Holiday Holiday and VFFta VFR= Business/conference Other Duration of trip, % of trips with number of nights equal to: 1 2 3 4 5 6 7 14 Average number of nights
1980
7981
1982
1983
1984
1985
50 11 15 13 3
60 13 15 9 4
50 16 9 13 3
55 18 13 11 4
56 12 18 11 4
50 11 16 10 6
71 6 5 17 1
72 8 4 14 3
71 9 4 14 2
72 11 7 9 1
69 8 5 16 2
74 6 5 13 2
15 20 13 7 5
16 23 11 7 6 7 16 4 4.9
14 20 9 10 6 7 17 4 5.1
15 24 11 6 5 6 18 5 5.1
19 It3 IO R 6 7 19 5 5.1
18 23 11 8 4 6 18 3 4.6
a 14 5 5.3
holidays are also popular (lS%), but only 12% of tourists stay more than seven nights. These shorter length holidays are ideal for ‘special interest’ and ‘activity’ breaks. Clearly Wales cannot compete with those countries bordering the Mediterranean in terms of offering guaranteed sunshine for a two-week family seaside holiday, and therefore emphasis should be placed on what Wales can offer. The vast amount of open countryside with its possibilities for pony-trekking, walking, fishing, bird-watching, cycling, visits to farms, etc, together with Welsh castles, steam trains, craft industries, historical sites, festivals and cultural heritage are features which can be exploited. Special interest holidays also have the advantage that many are additional holidays and thus not concentrated in the peak summer months. Table 10 gives a comparison of market shares of visits to Wales and the UK by overseas visitors’ area of residence. In 1985, 34.2% of overseas visits to Wales were from North America and 32.7% were from the European Community. By contrast, most overseas visits to the UK were from the European Community (38.4%), followed by North America (28.2%). Over the period 1981-85 the share of trips from North America in the overseas visitors market for both Wales and the UK increased steadily, while the share of visits from the European Community declined. The market shares of the most important generating countries/areas in 1985 are shown in Table 11. For Wales the most important source country in 1985 was the USA (24.8%), followed Table10.
Market shares
of visits to Wales and the UK by overseas
visitors’ area of residence
(%).a b Notes: aFigures for the UK are given in brackets alongside those for Wales. bOnly visits of at least one overnight stay have been included in the data for Wales and visits from the Irish Republic have been excluded from both Welsh and UK data. Source: BSO, Business Monitor MQ6, HMSO, London, various issues.
North America
Country European Community
23.5 24.1 30.4 33.9 34.2
40.8 44.3 37.6 33.0 32.7
Year
1981 1982 1983 1984 1985
(19.9) (19.9) (24.5) (26.2) (28.2)
(45.6) (44.7) (41.7) (39.5) (38.4)
TOURISM
of origin Ofher Western European 12.6 6.8 6.6 8.0 7.0
(12.8) (12.8) (12.5) (12.6) (12.8)
MANAGEMENT
Other area.s
23.5 24.6 25.6 25.1 26.3
December
(21.7) (22.5) (21.3) (21.7) (20.6)
1987
Economic
impact of tourism on Wales
Table 11. Market shares of visits to Wales and the UK by overseas visitors’ country/area of residence - 1985. Country/area of residence
Notes: “Only visits of at least one overnight stay. bExcludes visits from the Irish Republic.
Source: BSO, Business Monitor MA6 1985, HMSO, London, 1986.
‘Business Statistics Office (BSO), Business Monitor MQ6 Quarter 3 1966, HMSO, London.
1987.
TOURISM
MANAGEMENT
Walez@
UKb
market
market
share (%)
share (%)
USA
24.8
23.5
Canada Total (North America)
9.4 34.2
4.7 28.2
Belgium/Luxembourg France FR Germany Italy Netherlands Denmark Total (European Community)
4.2 6.4 12.3 1.6 7.0 0.9 32.7
3.7 12.0 11.0 3.7 5.7 1.5 38.4
Spain Austria Switzerland Sweden Total (Other Western European)
1.5 1.7 1.5 1.5 7.0
2.5 0.8 2.5 2.8 12.8
Middle East South Africa Australia New Zealand Total (Other Countries)
4.6
4.4 1.1 3.5 0.6 20.6
1.7 11.6 I .8 26.3
by FR Germany (12.3%), Australia (11.6%), Canada (9.4%), Netherlands (7.0%) and France (6.4%). All other origins had market shares below 5%. For the UK, those generating countries with market shares of at least 5% in 1985 were the USA (23.5%), France (12.0%), FR Germany (11.0%) and the Netherlands (5.7%). Visits from North America to Wales form a significant part of the total number of overseas visits (in excess of one third in 1985), and this share has been increasing. Clearly, there are risks involved in relying too heavily on a single source area for tourists and therefore some attempt should be made to diversify overseas visits to Wales across a reasonable number of generating countries. The fickleness of international travel tastes combined with political factors such as foreign government imposed obstacles to international travel can result in a dramatic drop in foreign tourist visits from a given origin. For example, the threats of terrorist activity against USA citizens travelling to Europe consequent upon the USA bombing of Libya in April 1986 resulted in a substantial cut in USA tourist arrivals. Visits to the UK by North American visitors during the first quarter of 1986 were 7.4% up on the first quarter of 1985. However, the corresponding second quarter figure showed a 40.7% decline and the third quarter figure a 30.7% decline. Visits to the UK by other overseas visitors increased by 9.3% in the first quarter of 1986 compared with the first quarter of 1985, declined by 6.2% in the second quarter and increased by 2.8% in the third quarter. The dramatic difference in behaviour between North American and other overseas visitors to the UK was less pronounced in the case of Wales in the second quarter but almost as great in the third quarter. For North American visitors the second quarter 1986 figure was 18.5% down on the 1985 figure, whereas the corresponding value for other overseas visitors to Wales was a 10.3% decline. During the third quarter of 1986, however, North American visits showed a reduction of 26.9%) compared with a mere 1.7% decline in other overseas visits.’ Table 12 ranks the source countries/areas for visits to Wales according
December 1987
313
Economic impact of tourism on Wales Table 12. Source countries/areas per day in the UK - 1985.
Notes: aOnty those origin countries included where number of visits to Wales is at least 5000. bOntY visits of at k?aSt One overnight Stay excluding visits from the Irish Republic. Source: BSO, Business Monitor MA6 1985, HMSO, London, 1986.
for overseas visits to Wales ranked by average expenditure
Country/area of residence’
Average expenditure per day in the UK (f, current prices)
% of overseas visits to Wale&
Middle East USA Belgium/Luxembourg Switzerland South Africa Sweden Canada Denmark Italy Spain Austria Australia
59.8
4.6 24.8 4.2 1.5 1.7 1.5 9.4 nn _.-
47.3 35.1 29.7 26.3 25.7 25.3 23.9 23.0 22.7 22.0 21.6 21.4 19.5 18.5 16.5
Netherlands
, France New Zealand FH Germany
1.6 1.5 1.7 11.6 7.0 6.4 1.8 12.3
to average expenditure per day in the UK in 1985. (Only those origins are included where the number of visits to Wales is at least 5000.) Relatively high-spending tourists are valuable target markets and give an indication as to where marketing activity should be directed. Tourists from the Middle East have the highest expenditure per day (f60), followed by the USA (f47), Belgium/Luxembourg (.f35), Switzerland (.X30), South Africa (f26), Sweden (f26) and Canada (f2.5). Now the number of tourists from the Middle East is likely to suffer a fall following the decline in oil prices, and fewer USA visitors are expected. There may also be political problems associated with increased promotional activity in South Africa. This implies that the markets in which promotional effort should be particularly strengthened are the high-spending countries of Europe.
Supply constraints
“Recent surveys suggest that over 50% of British visitors staying in hotels in Wales have been on holiday abroad in the last five years (Wales Tourist Board, A&rkefirTg Plan 1986/67, Cardiff, 1986).
Table 13 shows bedspace occupancy rates in hotels in Wales by month over the period 1981-85, where the occupancy rate is defined as the total number of occupied bedspaces divided by the total number of bedspaces available. Overall there appear to be no problems regarding supply constraints. The maximum occupancy rate, even in the peak month of August, was always below 65%. It is clear, however, that these overall figures may disguise pressures for certain types of accommodation. For example, many hotel rooms still do not incorporate private bathroom facilities, and yet such facilities are commonplace Table 13. Bedspace occupancy
rates in hotels in Wales= (%).
1981
1982
Year 1983
1984
1985
20 26 29 39 48 46 51 60 54 38 26 22
19 26 32 38 43 48 49 56 48 37 29 20
19 24 31 36 45 48 52 60 54 39 28 22
22 25 32 40 47 51 55 59 53 42 29 24
20 25 35 42 52 55 59 63 56 43 29 23
Month
Note: aBedspace occupancy rate = total number of bedspaces occupied/total number of bedspaces available. Source: Wales Tourist Board, Hotel Occupancy in Wales, WTB, Cardiff, July 1987.
314
January February March April May June July August September October November December
TOURISM
MANAGEMENT
December
1987
Economic impact of tourism on wales
even on the fairly inexpensive inclusive tours to Spain.l’ Investment in such hotel improvement is likely to make hotel accommodation in Wales considerably more attractive.
Conclusions
“See ‘Reports clash on tourism’s ability to generate jobs’, The Times, 21 May 1986, p 25.
TOURISM
MANAGEMENT
The development of tourism in Wales is a feasible strategy to increase income and employment. Tourism receipts represent about 5% of GDP in Wales and about 10% of total employment is related to tourism. Tourism thus makes a useful contribution to job creation, but caution should be exercised to guard against excessive claims regarding the ability of tourism to generate employment.” A targeted marketing effort is crucial to sustaining the impact of tourism development. The traditional British one/two week seaside family holiday is in decline and hence other (expanding) market segments need to be explored. For example, rural tourism is relatively highly developed in Wales compared with other regions of the UK and special interest holidays are increasing in popularity. Hence farm tourism, walking holidays, fishing holidays, etc should be promoted vigorously. By continuing the trend towards increased professionalism in rural tourism, it should be possible to exploit this segment further. Rural tourism can also partially offset the tendency towards depopulation of rural Wales. Farm tourism enhances farmers’ incomes, and thus rural communities are preserved as farms become more economically viable. A further advantage of farm tourism is that the level of repeat buying is high. Another market segment worthy of special attention is the UK over-55 age group. Many of these people may not wish to travel overseas on holiday, as there is a tendency to become less mobile with increasing age. In particular, this age group could be encouraged to come to Wales for a traditional seaside holiday. The day-trip sector is growing and makes a major contribution to the economy of Wales, so effort should also be directed towards expanding this sector. In order to maximize the economic benefits of tourism, high-spending tourists should be encouraged to visit Wales - eg the holidaymaker and business/conference visitor sections of British tourists spend considerably more than those visiting friends and relatives. In addition, expenditure by tourists from southeast England tends to be higher than that by tourists from other areas of the UK. The average expenditure of overseas tourists in Wales is considerably higher than that of British tourists, but there is substantial variation in the expenditure level among the source countries. The two areas which generate tourists with the highest average expenditure per day in the UK are the Middle East and the USA. However, it is likely that the Middle East market will decline as a result of falling oil prices. Also the image of Europe generally as a tourist destination has suffered considerably in the USA following the USA-Libya conflict in April 1986, and consequent threats of retaliation against USA citizens. This has resulted in a substantial decline in the number of tourists from the USA visiting Wales. Attention should therefore be paid to any particular conditions in the various origins, in order to ascertain the likely responsiveness to promotional activity regarding Wales. Clearly, diversification of promotional effort across several origins is essential in order to reduce the risk associated with concentrating on one or two specific generating countries. As well as deciding how to allocate marketing resources within the UK market and
December
1987
315
Economic impact of tourism on Wales
the division of the overseas budget among the various overseas markets, it is necessary to decide on the UK/overseas split. Although overseas tourists tend to spend more, the UK market is more stable. In particular, the demand for tourism to Wales by overseas residents is subject to changes in exchange rates, impediments to international travel imposed by foreign governments (eg restrictions limiting the amount of currency their citizens may purchase for travel abroad - as happened in France in the early 1980s) and the international political climate. The opening of the new Wales Centre in central London in April 1986 should help considerably in encouraging potential tourists to acquire information on Wales. The prime site and well-planned and roomy accommodation should emphasise the professional approach to attracting tourists to Wales and improve the country’s image as a ‘go-ahead’ holiday area. Investment in tourist amenities and accommodation is necessary to achieve improvement in market size in the longer term. For example, the upgrading of existing hotels to provide more rooms with en suite facilities should be regarded as a priority. Many British tourists have become accustomed to this standard of accommodation on their holidays abroad.
316
TOURISM MANAGEMENT December 1987
Wales; tourism; economic im-
Stephen Witt is Lecturer in Econometrics University of Bradford Management Centre. Emm Lane. Bradford. West Yorkshire iD9 4JL, UK.’
at the
Acknowledgement An earlier version of this paper was presented at an Agricultural Economics/ Agricultural Marketing Department Seminar, University College of Wales, Aberystwyth, Wales, UK, April 1986. The author would like to thank participants for their helpful comments. The author is also most grateful to the Research Services Unit of the Wales Tourist Board for the provision of information. ‘See World Tourism Organization, Yearbook of Tourism Statistics, WTO, Madrid, 1986; and World Tourism Organization, The World Tourism Organization in 1984, WTO, Madrid, 1985. ‘See also V.T.C. Middleton, Tourism in Wales: An Overview, Wales Tourist Board, Cardiff, 1980; V.T.C. Middleton, ‘England and Wales’, International Tourism Reports, No 2, 1986, pp 5-26; V.T.C. Middleton, ‘Marketing Holidays to Wales: Responding to Market Changes’, Tourist Review, Vol 42, No 2, April/June 1987, pp 27-30; and D.E.L. Thomas, ‘Tourism in the UK - an industry riding on the exchange rate’, Service Industries Journal, continued on page 308
306
Tourism is a massive industry worldwide and is growing. The current annual level of international tourist arrivals (340 million) is about four times that of the early 196Os, and the current annual level of international tourist receipts (US $115 000 million) represents about 5% of the total value of international trade. Domestic tourism is currently estimated to comprise 3500 million trips.’ Within this context it is interesting to examine the international and domestic tourism markets in Wales, and in particular to compare the impact of tourism on the economy of Wales with that on the UK economy as a whole.* Tourism can benefit a host country in various ways including the generation of income and employment.3 With regard to income, in 1985 in Wales British tourists staying at least one night spent f500 million and overseas tourists staying at least one night spent 2100 million. In 1984 day visitors spent about f300 million. Total visitor spending in Wales is thus of the order of $900 million. With regard to employment, tourism sustains, directly or indirectly, over 90 000 full-time job equivalents in Wales. The number of people who owe their livelihoods to tourism represents about 10% of total employment in Wales (the comparable UK figure is 6%). An advantage with tourism is that it is relatively labour intensive compared to other industries. A further benefit of tourism is that it contributes to the financial viability of a wide range of services and amenities which can also be used by local residents, for example restaurants, hotels, theatres, cinemas, public transport and sports facilities. In addition, visits to tourist attractions can contribute to the conservation of areas of scenic value, historical buildings, and so on. Tourism can also result in the continued existence of traditional occupations, for example handicraft industries and farming. Farmers can gain extra income by providing tourist facilities, and at the present time 6000 Welsh farmers are involved in tourism with 1300 farms providing serviced accommodation.4 The natural resources of Wales represent a major strength of its tourism product (see Figure l), eg the long coastline and plentiful beaches, countryside, forests, mountains and national parks all attract tourists.
Domestic and foreign inward tourism Magnitude
and growth
Table 1 shows the total number of trips of at least one overnight stay by British residents within Britain over the period 1975-85, and also the
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Economic impact of tourism on Wales Table 1. Visits and expenditure by British tourists wtthln grttaln.
Notes: aOnly visits of at least one overnight stay. bRefers to % change with respect to previous year. Source: British Tourist Authority, British Tourism Survey (Month/y), BTA. London, various issues.
continued from page 306 Vol6, No 3, November 1986, pp 399-416. 3For further discussion see B. Archer, ‘Tourism and the British economy’, Rivisfa lnternazionale di Scienze Economiche e Commerciafi, No 31, July 1984, pp 596 612; B.S. Duffield and J. Long, ‘The role of tourism in the economy of Scotland’, Tourism Management, Vol5, No 4, December 1984, pp 256-268; and R.A. Henderson, Recent Trends in Tourism and the Economic Impact of Tourists in Scotland, Economic and Statistics Unit Discussion Paper No 15, Scottish Economic Planning Department, Edinburgh, 1982. ‘Tourism is not always regarded as beneficial, eg it can have a negative social and ecological impact. See P.J. Sheldon and T.Var, ‘Resident attitudes to tourism in North Wales’, Tourism Management, Vol 5, No 1, March 1984, pp 4G47.
Year
Visita? (X 106)
% changeb
Expendlture % changeb (f x lb current prices)
Expenditure % chang& (f x 106 1080 prices)
1975 1976 1977 1978 1979 1980 1981 1982 1983
117 121 121 119 118 130 126 123 131 140 126
2.6 3.4 0.0 - 1.8 - 0.8 10.2 - 3.1 - 2.4 6.5 6.9 -10.0
2150 2400 2625 3100 3800 4550 4600 4500 5350 5975 6315
4500 4375 4100 4200 4500 4550 4075 3650 4075 4275 4205
19.4 11.8 9.4 18.1 22.6 19.7 1.1 - 2.2 18.9 11.7 5.7
0.0 -
2.8 6.3 2.4 7.1 1.1 -10.4 -10.4 11.6 4.9 - 1.6
corresponding expenditure figures. The visit data and the expenditure figures in terms of 1980 prices were both at about the same level in 1985 as in 1975. Table 2 gives the total number of overseas visits to the UK (including day-trips) over the same period, together with the expenditure figures. In contrast to the static picture for domestic tourism presented in Table 1, Table 2 indicates that foreign inward tourism grew by 53% in terms of visits between 1975 and 1985, and by 42% in terms of real expenditure. Furthermore, although overseas visits to the UK in 1985 were only at the level of 11% of domestic trips, expenditure by overseas visitors to the UK was at the level of 86% of domestic expenditure. Hence, foreign inward tourism is almost as important as domestic tourism in terms of the impact on the UK economy. Statistics relating to the magnitude and growth of domestic and foreign inward tourism in Wales are presented in Tables 3 and 4. Table 3 shows the total number of trips of at least one overnight stay by British residents within Wales over the period 1975-85, and the corresponding Table 2. Visits to and expenditure in the UK by overseas visitors.
Notes: “Includes day-trips. “Refers to % change with respect to previous year. SLWCe: Business Statistics Office (BSO), Business Monitor MQ6 Quarter 4 1986, HMSO, London, 1987.
Year
Visit@ (x 103)
% changeb
% changeb Expenditure (f x IO@current prices)
1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985
9 490 10808 12 281 12646 12486 12421 11 452 11 636 12464 13644 14 483
11.1 13.9 13.6 3.0 - 1.3 - 0.5 - 7.8 1.6 7.1 9.5 6.1
1218 1768 2352 2507 2797 2981 2970 3188 4003 4614 5451
Table 3. Visits and expenditure
Notes: *Only visits of at least one overnightstay. bReffers to % change with respect to previous year. Source: British Tourist Authorii. British Tourism Survey (Month/y), BTA, London, various issues.
308
11 11 12 12 11 13 11 12 12 12 11
200 250 275 325 350 450 425 425 450 530 500
2560 3218 3681 3410 3310 2961 2628 2582 3051 3296 3629
35.8 45.2 33.0 6.6 11.6 5.9 0.3 7.3 25.6 15.3 18.1
14.2 25.7 14.4 - 7.4 - 2.9 -10.5 -11.2 - 1.8 18.2 8.0 10.1
by British tourists within Wales.
Expenditure (f x Id current prices) 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985
Expenditure % changeb (f x 106 1980 prices)
% changeb
0.0 25.0 10.0 18.2 7.7 28.6 - 5.6 0.0 5.9 17.8 - 5.7
TOURISM
Expenditure (f x lo6 1980 prices)
% chang&’
425 450 425 450 425 450 375 350 350 380 335
-15.0 5.9 - 5.6 5.9 - 5.6 5.9 -16.7 - 6.7 0.0 8.6 -11.8
MANAGEMENT
December 1987
Economic Notes:
*Only visits of at least one overnightstay. bRefersto % change with respect to previous year. cFigures for previous years not strictly comparable. Source:
Wales Tourist Board, Tourism in Wales: Volume and Value, WTB, Cardiff, July 1987.
Notes:
“Figures for the UK appear in brackets alongside those for Wales. bWelsh data derives only from trips of at least one overnight stay. ‘UK data derives only from trips of at least one overnight stay for British tourists but includes receipts from day-trips by overseas visitors; for domestic tourism refers to Britain onlv. Sources:
Central Statistics Office (CSO), Regional Trends London, 1987; British Tourist AuthorTourism Survey (Monthly), London, various issues; B80, Business Monitor MO6 Quarter 4 WW, HMSO, London, 1987; and Wales Tourist Board, Tourism in Wales:Volume and Value, WTB, Cardiff, July 1987.
22. HMO, ity, British
impact
of tourism
on wales
Table 4. Visits to and expenditure In Wales by overseas ViSftorS.
Visitsa
Year
% changeb
Expenditure (f x 10’ current prices)
Expenditure (f x 106 1980 prices)
_c 10.0 15.9 12.7 0.9
50 50 75 85 95
45 40 55 60 65
(x 103 400 440 510 575 580
1981 1982 1983 1984 1985
Table 5. Tote1 tourism receipts as % of GDP in Wales and the UK.” Tourism receipts& (current prices)
Year
1981 1982 1983 1984 1985
Total (f x t06)
Per capita (f)
475 475 525 615 595
169 (134) 169 (137) 187 (166) 219 (188) 211 (208)
(7575) (7 700) (9 350) (10 600) (11 765)
GDP (f x IO’) (current prices)
Tourism receipts as % of GDP
8 727 9 674 IO 640 11 010 12 680
5.4 4.9 4.9 5.6 4.7
(216 988) (237 138) (259 229) (280 129) (305 741)
(3.5) (3.2) (3.6) (3.8) (3.8)
expenditure data. Again the level of visits is fairly static, but in this case expenditure in 1980 prices declined by 21% between 197.5 and 1985. Data on the number of overseas visits to Wales incorporating at least one night’s stay are presented in Table 4, together with the expenditure figures. Only the figures for 1981-85 are given. Direct comparisons of these data with the corresponding values for earlier years are not possible owing to changes in the method of data collection. It can be seen that substantial growth in overseas tourism to Wales took place over the period considered - between 1981 and 1985 the number of visits increased by 45% and real expenditure by 44%. In spite of the decline in British tourists’ real expenditure and the growth in overseas tourists’ real expenditure, by 1985 overseas tourists’ expenditure in Wales was still only at the level of 19% of British tourists’ expenditure in Wales. The British tourist therefore still has a far greater impact on the economy of Wales than the overseas visitor. In fact, overseas tourism plays a substantially greater relative role in Scotland. In 1985 the ratio of overseas tourists’ expenditure in Scotland to British tourists’ expenditure in Scotland was 29%, compared with the corresponding figure for Wales of 19%.”
Tourism receipts as percentage of GDP
5Data relating to Scotland were obtained from J. Stuart, ‘Tourism in Scotland under new management’, Tourism Management, Vol7, No 4, December 1986, pp 298-301. ‘Corresponding values for Eastern European countries are given in P.J. Buckley and S.F. Witt, ‘The international tourism market in Eastern Europe’, Service Indusfries Journa/, Vol 7, No 1, January 1987, pp 91-104.
Data on tourism receipts for the period 1981-85 are shown in Table 5. In each year, both tourism receipts per capita and tourism receipts as a percentage of gross domestic product (GDP) were higher in Wales than in the UK, thus demonstrating the relatively greater importance attaching to the role of tourism in the Welsh economy compared with the UK economy. Tourism receipts are 4.5%-5.5% of GDP in Wales as opposed to 3%-4% of GDP in the UK. Table 6 illustrates the importance of international tourism receipts as a percentage of GDP for selected European countries.‘j In the case of Wales this now includes receipts from England and Scotland. It can be seen that Austria takes on the highest value (about 7.5% in 1985), followed by Spain, Greece and Wales (4%-5%). For the UK, international tourism receipts are about lS%-2% of GDP, substantially lower than the value for Switzerland but double the value for FR Germany. The fact that Wales is on a par with Spain and Greece in
TOURISM MANAGEMENT December 1987
309
Economicimpactof tourismon Wales Notes: alncludes receipts from England and Scotland bNew series from 1984. ‘Fiaures not available.
Table 6. International countries 1981-1985.
tourism
So&es: CSO, Regional Trends 22, HMSO, London, UK, 1987; British Tourist Authority, British Tourism London, UK, various issues; Survey (Month/y), BSO, Business Monitor MQ6 Quarter 4 1986, HMSO, London, UK, 1987; Wales Tourist Board, Tourism in Wales: Volume and Value, Cardiff. Wales, UK, July 1987; P.J. Buckley and SF. Witt, ‘The international tourism market in Eastern Europe’, Service industries Journal, Vol 7, No 1, January 1987, pp 91-104; Wales Tourist Board; International Monetary Fund, international Financial Statistics. IMF. June 1987: and World Tourism Organization, Yearbook of Tourism SlaCstics, WTO, Madrid, 1986.
receipts
as % of GDP - comparison
Tourism receipts/GDP
of various
European
(%)
Country
Wales? UK Austria FR Germany Greece Spain Switzerland Turkeyb
1981
1982
1983
1984
1985
4.5 1.4 8.6 0.9 5.1 3.6 3.2 0.7
4.4 1.3 a.5 0.8 4.0 3.9 3.1 0.7
4.4 1.5 7.6 0.8 3.4 4.3 3.3 0.8
4.9 1.6 7.8 0.9 3.9 4.8
4.2 1 .a 7.6 0.9 4.3 _c
3.5 3.7
3.4 _c
terms of international tourist receipts in relation to GDP is a clear indication of the importance of tourism to the economy of Wales. Tourism receipts include expenditure on imported gooas and services, and taxes on expenditure. Hence the value of tourism receipts expressed as a percentage of GDP overstates somewhat the contribution of tourism to GDP. Bearing this limitation in mind, Table 7 gives a comparison of tourism receipts as a percentage of GDP with the contribution to GDP of selected industry groups in Wales. Manufucturing is the industry group which makes by far the largest contribution to GDP in Wales (24% in 198.5). Energy and water supply comes next with 13%, and this is followed by financial and business services, etc which contributed 9% to GDP in 1985, at least double the contribution of tourism. The contribution to GDP of construction also exceeds that of tourism whereas the contribution of agriculture, forestry and fishing is probably slightly less than that of tourism.
Contribution
of tourism to employment
Tourism is a relatively labour intensive industry and therefore expansion of the industry is a sensible route to follow in order to create new jobs. It is also a highly cost-effective strategy, as the average cost to public funds of creating one full-time job in tourism is substantially lower than in most other industries. Furthermore, the jobs created by tourism are spread throughout Wales rather than just being concentrated in urban centres, so tourism helps to counteract the movement from rural to urban areas. Tourism expenditure in Wales creates further rounds of economic activity and therefore the multiplier effect needs to be considered. Direct expenditure by tourists accrues to hoteliers, public house owners, restaurant owners, shop-keepers, and owners of other tourist facilities. Indirect expenditure comprises the successive rounds of inter-business transactions resulting from the direct expenditure, eg purchases of food by restaurant owners from suppliers. Induced expenditure is the Table 7. Contribution to GDP of selected industry groups in Wales 1961-1985. Contribution to GDP (%) Industry group 1981
1982
1983
1984
1985
4.1 10.1 22.6 7.1 7.9 5.4
4.1 10.1 23.0 6.8 7.7 4.9
3.1 12.7 23.2 6.7 8.1 4.9
3.7 a.5 24.6 7.0 9.0 5.6
3.1 12.9 23.9 6.6 9.1 4.7
Note: aBanking, finance, insurance, business services and leasing. Sources:
Agriculture, forestry and fishing Energy and water supply
CSO, Regional Trends, HMSO, London, 1986 and 1987; and Wales Tourist Board, Tourism in Wales: Volume and Value, WTB. Cardiff, July 1987.
Manufacturing Construction Financial and business services, etca Tourism receipts as % of GDP
310
TOURISM
MANAGEMENT
December
1987
Economic
impact of tourism on Wales
increased consumer expenditure which takes place as a result of the extra personal income generated by tourism expenditure, eg waiters’ spending on goods and services. The multiplier effect diminishes with successive rounds of spending as a result of ‘leakages’, eg goods and services imported into Wales. The various forms of tourism-related expenditure generate employment in the economy - direct employment is created by direct expenditure and secondary employment by indirect and induced expenditure.’ It is estimated that tourism currently sustains over 90 000 full-time job equivalents in Wales. No detailed survey has been carried out recently the most up-to-date breakdown of figures relates to 1974, and this is shown in Table 8. The data in this Table appear in a study by Archer and Shea in which tourism-generated employment is examined. Direct and secondary employment resulting from tourist expenditure in Wales are calculated by injecting tourism expenditure into an input&output model of the economy of Wa1es.s It can be seen that of the 83 100 full-time job equivalents due to tourism, 27 500 (33%) were in the accommodation sector.
Characteristics
7For further discussion of tourism multipliers see, eg, World Tourism Organization and Horwath and Horwath International, Tourism Multipliers Explained, WTO, London, 1981; B.H. Archer, ‘The anatomy of a multiplier’, Regional Studies, Vol 10, No 1, 1976, pp 71-77; M. Brownrigg and M.A. Greig, ‘Differential multipliers for tourism’, Scottish Journal of Political Economy, Vol 22, No 3, November 1975, pp 261-275; and M. Hanna, Tourism Multipliers in Britain, English Tourist Board, London, 1976. ‘B.H. Archer and S. Shea, Manpower in Tourism: The Situation in Wales, Wales Tourist Board, Cardiff, 1977. A description of the input-output model used is given in Appendix 2.
of incoming tourists
Statistics concerning the British visitor to Wales are presented in Table 9. The breakdown of trips by purpose of visit shows that most tourists are holidaymakers (58% in 1985), followed by people visiting friends and relatives (16%), and tourists combining a holiday with visiting friends and relatives (11%). Business/conference tourism only accounted for 10% of trips. When these figures are examined in conjunction with those relating to the breakdown of expenditure by purpose of visit, it can be seen that holidaymakers spend above average (58% of trips but 74% of expenditure in 1985) as do business/conference tourists (10% of trips but 13% of expenditure). By contrast those tourists who visit friends and relatives spend less than average. Visits to friends and relatives comprised 27% of trips to Wales in 1985 (including the category who also took a holiday), but this group of tourists was only responsible for 11% of expenditure. Clearly, particular effort should be directed towards encouraging the British holidaymaker and business/ conference tourist to visit Wales. The tourist visiting friends and relatives yields little economic benefit. The data in Table 9 relating to the breakdown of trips by duration of trip show that the majority of visits to Wales are short breaks (holidays of one to four nights accounted for 60% of the total in 1985). One-week
Table 8. Employment generated by tourism in Wales, June 1974. Employment Total full time job equivalents (including secondary
effects)
83 100 Directly in accommodation
Source: B. Archer and S. Shea, Manpower in Tourism: The Situation in Wales, WTB, Cardiff, 1977.
TOURISM
MANAGEMENT
Full time job equivalents Number of persons employed in: hotels and guest houses bed and breakfast establishments caravan and camping sites furnished accommodation units Total no of persons employed
December 1987
sector
27 500 25 2 5 2 35
400 100 700 000 200
311
Economic
impact of tourism on Wales Table 9. British Holiday
Note: aVFR denotes visits to friends and relatives. Source: British Tourist Authority, British Tourism Survey (Monthly), BTA, London, various issues.
visitors
to Wales.
attribute
Year
Purpose of visit breakdown of trips for (%) Holidav Holiday and VF!? VFRa Business/conference Other Purpose of visit breakdown of expenditure (%) Holiday Holiday and VFFta VFR= Business/conference Other Duration of trip, % of trips with number of nights equal to: 1 2 3 4 5 6 7 14 Average number of nights
1980
7981
1982
1983
1984
1985
50 11 15 13 3
60 13 15 9 4
50 16 9 13 3
55 18 13 11 4
56 12 18 11 4
50 11 16 10 6
71 6 5 17 1
72 8 4 14 3
71 9 4 14 2
72 11 7 9 1
69 8 5 16 2
74 6 5 13 2
15 20 13 7 5
16 23 11 7 6 7 16 4 4.9
14 20 9 10 6 7 17 4 5.1
15 24 11 6 5 6 18 5 5.1
19 It3 IO R 6 7 19 5 5.1
18 23 11 8 4 6 18 3 4.6
a 14 5 5.3
holidays are also popular (lS%), but only 12% of tourists stay more than seven nights. These shorter length holidays are ideal for ‘special interest’ and ‘activity’ breaks. Clearly Wales cannot compete with those countries bordering the Mediterranean in terms of offering guaranteed sunshine for a two-week family seaside holiday, and therefore emphasis should be placed on what Wales can offer. The vast amount of open countryside with its possibilities for pony-trekking, walking, fishing, bird-watching, cycling, visits to farms, etc, together with Welsh castles, steam trains, craft industries, historical sites, festivals and cultural heritage are features which can be exploited. Special interest holidays also have the advantage that many are additional holidays and thus not concentrated in the peak summer months. Table 10 gives a comparison of market shares of visits to Wales and the UK by overseas visitors’ area of residence. In 1985, 34.2% of overseas visits to Wales were from North America and 32.7% were from the European Community. By contrast, most overseas visits to the UK were from the European Community (38.4%), followed by North America (28.2%). Over the period 1981-85 the share of trips from North America in the overseas visitors market for both Wales and the UK increased steadily, while the share of visits from the European Community declined. The market shares of the most important generating countries/areas in 1985 are shown in Table 11. For Wales the most important source country in 1985 was the USA (24.8%), followed Table10.
Market shares
of visits to Wales and the UK by overseas
visitors’ area of residence
(%).a b Notes: aFigures for the UK are given in brackets alongside those for Wales. bOnly visits of at least one overnight stay have been included in the data for Wales and visits from the Irish Republic have been excluded from both Welsh and UK data. Source: BSO, Business Monitor MQ6, HMSO, London, various issues.
North America
Country European Community
23.5 24.1 30.4 33.9 34.2
40.8 44.3 37.6 33.0 32.7
Year
1981 1982 1983 1984 1985
(19.9) (19.9) (24.5) (26.2) (28.2)
(45.6) (44.7) (41.7) (39.5) (38.4)
TOURISM
of origin Ofher Western European 12.6 6.8 6.6 8.0 7.0
(12.8) (12.8) (12.5) (12.6) (12.8)
MANAGEMENT
Other area.s
23.5 24.6 25.6 25.1 26.3
December
(21.7) (22.5) (21.3) (21.7) (20.6)
1987
Economic
impact of tourism on Wales
Table 11. Market shares of visits to Wales and the UK by overseas visitors’ country/area of residence - 1985. Country/area of residence
Notes: “Only visits of at least one overnight stay. bExcludes visits from the Irish Republic.
Source: BSO, Business Monitor MA6 1985, HMSO, London, 1986.
‘Business Statistics Office (BSO), Business Monitor MQ6 Quarter 3 1966, HMSO, London.
1987.
TOURISM
MANAGEMENT
Walez@
UKb
market
market
share (%)
share (%)
USA
24.8
23.5
Canada Total (North America)
9.4 34.2
4.7 28.2
Belgium/Luxembourg France FR Germany Italy Netherlands Denmark Total (European Community)
4.2 6.4 12.3 1.6 7.0 0.9 32.7
3.7 12.0 11.0 3.7 5.7 1.5 38.4
Spain Austria Switzerland Sweden Total (Other Western European)
1.5 1.7 1.5 1.5 7.0
2.5 0.8 2.5 2.8 12.8
Middle East South Africa Australia New Zealand Total (Other Countries)
4.6
4.4 1.1 3.5 0.6 20.6
1.7 11.6 I .8 26.3
by FR Germany (12.3%), Australia (11.6%), Canada (9.4%), Netherlands (7.0%) and France (6.4%). All other origins had market shares below 5%. For the UK, those generating countries with market shares of at least 5% in 1985 were the USA (23.5%), France (12.0%), FR Germany (11.0%) and the Netherlands (5.7%). Visits from North America to Wales form a significant part of the total number of overseas visits (in excess of one third in 1985), and this share has been increasing. Clearly, there are risks involved in relying too heavily on a single source area for tourists and therefore some attempt should be made to diversify overseas visits to Wales across a reasonable number of generating countries. The fickleness of international travel tastes combined with political factors such as foreign government imposed obstacles to international travel can result in a dramatic drop in foreign tourist visits from a given origin. For example, the threats of terrorist activity against USA citizens travelling to Europe consequent upon the USA bombing of Libya in April 1986 resulted in a substantial cut in USA tourist arrivals. Visits to the UK by North American visitors during the first quarter of 1986 were 7.4% up on the first quarter of 1985. However, the corresponding second quarter figure showed a 40.7% decline and the third quarter figure a 30.7% decline. Visits to the UK by other overseas visitors increased by 9.3% in the first quarter of 1986 compared with the first quarter of 1985, declined by 6.2% in the second quarter and increased by 2.8% in the third quarter. The dramatic difference in behaviour between North American and other overseas visitors to the UK was less pronounced in the case of Wales in the second quarter but almost as great in the third quarter. For North American visitors the second quarter 1986 figure was 18.5% down on the 1985 figure, whereas the corresponding value for other overseas visitors to Wales was a 10.3% decline. During the third quarter of 1986, however, North American visits showed a reduction of 26.9%) compared with a mere 1.7% decline in other overseas visits.’ Table 12 ranks the source countries/areas for visits to Wales according
December 1987
313
Economic impact of tourism on Wales Table 12. Source countries/areas per day in the UK - 1985.
Notes: aOnty those origin countries included where number of visits to Wales is at least 5000. bOntY visits of at k?aSt One overnight Stay excluding visits from the Irish Republic. Source: BSO, Business Monitor MA6 1985, HMSO, London, 1986.
for overseas visits to Wales ranked by average expenditure
Country/area of residence’
Average expenditure per day in the UK (f, current prices)
% of overseas visits to Wale&
Middle East USA Belgium/Luxembourg Switzerland South Africa Sweden Canada Denmark Italy Spain Austria Australia
59.8
4.6 24.8 4.2 1.5 1.7 1.5 9.4 nn _.-
47.3 35.1 29.7 26.3 25.7 25.3 23.9 23.0 22.7 22.0 21.6 21.4 19.5 18.5 16.5
Netherlands
, France New Zealand FH Germany
1.6 1.5 1.7 11.6 7.0 6.4 1.8 12.3
to average expenditure per day in the UK in 1985. (Only those origins are included where the number of visits to Wales is at least 5000.) Relatively high-spending tourists are valuable target markets and give an indication as to where marketing activity should be directed. Tourists from the Middle East have the highest expenditure per day (f60), followed by the USA (f47), Belgium/Luxembourg (.f35), Switzerland (.X30), South Africa (f26), Sweden (f26) and Canada (f2.5). Now the number of tourists from the Middle East is likely to suffer a fall following the decline in oil prices, and fewer USA visitors are expected. There may also be political problems associated with increased promotional activity in South Africa. This implies that the markets in which promotional effort should be particularly strengthened are the high-spending countries of Europe.
Supply constraints
“Recent surveys suggest that over 50% of British visitors staying in hotels in Wales have been on holiday abroad in the last five years (Wales Tourist Board, A&rkefirTg Plan 1986/67, Cardiff, 1986).
Table 13 shows bedspace occupancy rates in hotels in Wales by month over the period 1981-85, where the occupancy rate is defined as the total number of occupied bedspaces divided by the total number of bedspaces available. Overall there appear to be no problems regarding supply constraints. The maximum occupancy rate, even in the peak month of August, was always below 65%. It is clear, however, that these overall figures may disguise pressures for certain types of accommodation. For example, many hotel rooms still do not incorporate private bathroom facilities, and yet such facilities are commonplace Table 13. Bedspace occupancy
rates in hotels in Wales= (%).
1981
1982
Year 1983
1984
1985
20 26 29 39 48 46 51 60 54 38 26 22
19 26 32 38 43 48 49 56 48 37 29 20
19 24 31 36 45 48 52 60 54 39 28 22
22 25 32 40 47 51 55 59 53 42 29 24
20 25 35 42 52 55 59 63 56 43 29 23
Month
Note: aBedspace occupancy rate = total number of bedspaces occupied/total number of bedspaces available. Source: Wales Tourist Board, Hotel Occupancy in Wales, WTB, Cardiff, July 1987.
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January February March April May June July August September October November December
TOURISM
MANAGEMENT
December
1987
Economic impact of tourism on wales
even on the fairly inexpensive inclusive tours to Spain.l’ Investment in such hotel improvement is likely to make hotel accommodation in Wales considerably more attractive.
Conclusions
“See ‘Reports clash on tourism’s ability to generate jobs’, The Times, 21 May 1986, p 25.
TOURISM
MANAGEMENT
The development of tourism in Wales is a feasible strategy to increase income and employment. Tourism receipts represent about 5% of GDP in Wales and about 10% of total employment is related to tourism. Tourism thus makes a useful contribution to job creation, but caution should be exercised to guard against excessive claims regarding the ability of tourism to generate employment.” A targeted marketing effort is crucial to sustaining the impact of tourism development. The traditional British one/two week seaside family holiday is in decline and hence other (expanding) market segments need to be explored. For example, rural tourism is relatively highly developed in Wales compared with other regions of the UK and special interest holidays are increasing in popularity. Hence farm tourism, walking holidays, fishing holidays, etc should be promoted vigorously. By continuing the trend towards increased professionalism in rural tourism, it should be possible to exploit this segment further. Rural tourism can also partially offset the tendency towards depopulation of rural Wales. Farm tourism enhances farmers’ incomes, and thus rural communities are preserved as farms become more economically viable. A further advantage of farm tourism is that the level of repeat buying is high. Another market segment worthy of special attention is the UK over-55 age group. Many of these people may not wish to travel overseas on holiday, as there is a tendency to become less mobile with increasing age. In particular, this age group could be encouraged to come to Wales for a traditional seaside holiday. The day-trip sector is growing and makes a major contribution to the economy of Wales, so effort should also be directed towards expanding this sector. In order to maximize the economic benefits of tourism, high-spending tourists should be encouraged to visit Wales - eg the holidaymaker and business/conference visitor sections of British tourists spend considerably more than those visiting friends and relatives. In addition, expenditure by tourists from southeast England tends to be higher than that by tourists from other areas of the UK. The average expenditure of overseas tourists in Wales is considerably higher than that of British tourists, but there is substantial variation in the expenditure level among the source countries. The two areas which generate tourists with the highest average expenditure per day in the UK are the Middle East and the USA. However, it is likely that the Middle East market will decline as a result of falling oil prices. Also the image of Europe generally as a tourist destination has suffered considerably in the USA following the USA-Libya conflict in April 1986, and consequent threats of retaliation against USA citizens. This has resulted in a substantial decline in the number of tourists from the USA visiting Wales. Attention should therefore be paid to any particular conditions in the various origins, in order to ascertain the likely responsiveness to promotional activity regarding Wales. Clearly, diversification of promotional effort across several origins is essential in order to reduce the risk associated with concentrating on one or two specific generating countries. As well as deciding how to allocate marketing resources within the UK market and
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1987
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Economic impact of tourism on Wales
the division of the overseas budget among the various overseas markets, it is necessary to decide on the UK/overseas split. Although overseas tourists tend to spend more, the UK market is more stable. In particular, the demand for tourism to Wales by overseas residents is subject to changes in exchange rates, impediments to international travel imposed by foreign governments (eg restrictions limiting the amount of currency their citizens may purchase for travel abroad - as happened in France in the early 1980s) and the international political climate. The opening of the new Wales Centre in central London in April 1986 should help considerably in encouraging potential tourists to acquire information on Wales. The prime site and well-planned and roomy accommodation should emphasise the professional approach to attracting tourists to Wales and improve the country’s image as a ‘go-ahead’ holiday area. Investment in tourist amenities and accommodation is necessary to achieve improvement in market size in the longer term. For example, the upgrading of existing hotels to provide more rooms with en suite facilities should be regarded as a priority. Many British tourists have become accustomed to this standard of accommodation on their holidays abroad.
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