What we don’t know about tourism and why it matters

The hidden costs of tourism are putting destinations at risk. We need new models for tourism management.

Everyone knows about the economic benefits of tourism. Tourism is one of the fastest growing economic sectors in the world and one of the main income sources for many countries. It contributes to development, generates employment, attracts investment and boosts related sectors. But no destination has the same level of understanding of the other side of the ledger – that is, how much tourism actually costs them.

The focus on the economic benefits of tourism has meant that destinations have long had a marketing mandate, seeking ways to bring in ever-more visitors. But, whilst destinations diligently measure the number of tourists they attract, very little information is collected on what it costs to host these visitors and manage their tourism assets. If we think of tourism as a business, it’s clear that this approach has its risks and consequences. Imagine running your own business in this way: just reporting on your revenue, but not accounting for any of the costs that go into running the businesses.

Earlier this year, the Travel Foundation partnered with Cornell University and Epler Wood International to research the costs of tourism and created a report entitled 'Destinations at Risk: The Invisible Burden of Tourism. What we found was that tourism brings hidden costs, or an ‘invisible burden’ to destinations. These costs include the infrastructure upgrades required to host visitors, the conservation and management of natural and cultural assets, increases in land and house prices, as well as social impacts such as over-crowding, and feelings of alienation.

In many cases, these costs are either assumed by residents, often through their taxes, or simply not accounted for at all, which puts environmental and cultural assets, as well as residential quality of life, at risk. One example is from Rhodes in Greece, where a new diesel-fired power plant has been built to service the increase (roughly double) in energy demand from tourism in peak season. As a result, Greek citizens paid $1.35 per tourist night (a total of $23 million) in 2013 to subsidize this power plant that has now locked the island in to another 20 years of fossil-fueled power generation.

Tourism initially appears to pay its own way, with visitors spending money on local services and tourism businesses paying taxes and utility bills. But as visitor numbers grow, the hidden costs of tourism that have been there from the start, begin to become more apparent. Eventually these unaccounted-for impacts reach a tipping point. This has been evident recently in the many stories in the media of overtourism, ranging from anti-tourism protesters in Barcelona to beach closures in Thailand.

What these stories and our new insights about tourism’s hidden costs point to is that we need a new model for managing tourism. Moving tourists away from ‘honey pot’ attractions and into shoulder seasons may help solve some of the issues of overtourism for a while, but it does nothing to account properly for the cost of tourism and the ‘Invisible Burden’ will simply move with the tourists.

"Destinations need a much heavier focus on managing the quality of tourism, whilst putting in place the right targets and incentives to support this."

Destinations need a much heavier focus on managing the quality of tourism, whilst putting in place the right targets and incentives to support this.

To truly solve the problem, destinations need to have insight into and influence over how people flow through their destination and, crucially, the impacts they have as they do so. Destinations need a much heavier focus on managing the quality of tourism, whilst putting in place the right targets and incentives to support this. People that work in tourism need new skills to drive innovation. Residents need a voice in how tourism is planned and managed. The public and private sector need to collaborate in a meaningful way. Lastly, and importantly, destinations need smart data that helps them to understand tourism’s costs.

The type of change we need takes time, vision and commitment. There are no quick fixes. But the risks of not accounting for tourisms costs are too great to ignore. Encouragingly, there are now pockets of progressive thinking, for example New Zealand, which has launched a strategy to manage the challenges of growth and share the benefits of tourism more widely; and the Netherlands’ vision, called Perspective 2030, which has clearly set out a new vision on tourism for the wellbeing of all Dutch citizens.

A good first step on this journey to better tourism management is for destinations to gain a much clearer picture of the costs tourism brings and the associated risks to the whole gamut of destination assets that tourism relies on. The prize for destinations that start working toward this is the potential to ensure that tourism actually adds value to destinations for generations to come.