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How eight hotels in Cyprus helped redefine how tourism should be analysed

  Posted in Travel Trends


By Clare Riley, Content and Editorial Manager, SiteMinder

When we consider the growth, sustainability, and health of tourism, we tend to do so by looking at a few macro-economic impact measures. Visitor arrival numbers is an especially popular one, of course, but GDP and a number of other metrics are also common datasets that we look at.

But are these metrics giving us the bigger picture? Are feet through the airport really the best indicator of the nation’s tourism initiatives? New research suggests that might not be the whole story at all.

The Travel Foundation has been working with hotel and travel company, TUI Group, and analysis firm, PricewaterhouseCoopers (PwC), to trial a more holistic approach to quantify tourism activities in a destination.

This method collects information on the economic, tax, environmental and social impacts that tourism has on a destination, to produce data that is far more comprehensive than simple footfall metrics.

Measuring the biggest benefits

The results, when applied to a pilot program of eight hotels in Cyprus, are fascinating.

Cyprus has an economy that relies heavily on tourism, with almost 7% of the nation’s GDP being realised directly through tourism activities. Taking into account indirect impacts of tourism (such as additional purchases of goods and services while a tourist is in the country), and you’re actually looking at close to a quarter of the economy relying on tourism.

With the economy still struggling to cope with the collapse in the banking system following the global financial crisis, tourism has been highlighted as a key opportunity for recovery for the market, and it was for this reason that eight hotels in Cyprus were selected for the pilot study.

The study found that the biggest benefit, as you might expect, was the economic and tax contributions that visitors made to Cyprus through their patronage of the eight hotels. Overall each guest contributed €84 per night. Given that each guest would only cost €4 in environmental costs, and €0.2 in social costs per night, this is a significant difference in favour of the profitable. Even when the cost of hotel construction is taken into account (and the longer term environmental costs, which accumulate over time), it is still easy to see just how significant the positive impact that tourism has on the economy of Cyprus.

But the study takes things much further than this, by quantifying the impact tourism has on Cyprus in more subtle ways.

For example, each guest night across the eight hotels was seen to have delivered €6.20 of job experience to employees. With unemployment sitting at 16% (2013), and youth unemployment at 40% (2013), having a robust industry such as tourism that is delivering skills and expertise to the population through ‘on the job’ training is a key benefit that these calculations can uncover.

For tourism industries in emerging economies, this metric is going to be of particular interest, as it will help to define the broader role that tourism can play in developing and modernising an economy and the expertise of its people.

Equally of interest will be the contribution that the eight hotels in Cyprus had to developing higher skills. The study was able to quantify the value of each hotel providing work placements to students studying for higher education degrees at €8,800 per work placement student. The number of students benefitting from work placements was quite low in Cyprus, but the ability for the study to quantify this educational value of tourism will be of great interest in other markets around the world.

Why is this pilot study important?

This study by PwC, The Travel Foundation, and TUI Group stems from a research framework called Total Impact Measurement and Management (TIMM). And there are four key categories of impact:

Economic: the effect of tourism on the economy in a given area

Tax: the amount of tax that tourism contributes to the economy.

Environmental: the affect tourism has on air, land and water quality, and natural resources

Social: the consequences tourism has on livelihoods, skills, and cultural heritage.

It was important to find a framework such as TIMM to determine the real value that hotels and tourism return into an economy, as it is a stated goal of the United Nations itself. The United Nations Environment Programme has a 10-year agenda that focuses on sustainability – including the sustainable development of tourism.

So, where foot traffic through an airport or contribution to GDP provides no feedback on the sustainability of tourism within a country, TIMM does, and this will be especially relevant to emerging economies in managing how tourism can become a sustainable contributor to the economy.

As the United Nations Sustainable Development Goals states, tourism should have value in creating jobs and promoting local culture and products.

For the tourism industry to have detailed access to information about the value and cost it is adding to the economy, governments and industry will be able to better come together to build tourism into a stable cornerstone of their economies, responsible for tax revenue, education and skills for the local population.

Read more about the importance of the hotel sector’s contribution to tourism in this reflective blog from SiteMinder’s managing director, Mike Ford.

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