Summer special: a look into the industry of holidaymaking
It’s difficult to understate tourism’s importance for some countries – and for their economies. Take Spain, for instance. Land of sunny beaches and bullfighting, 11% of the country’s GDP and 9.3% of its employment opportunities are derived from this industry. And it’s not alone, either.
In an international context of economic uncertainty and instability, tourism represents a shining beacon of light for countries blessed with a favourable climate. Spain, Greece and Italy can all boast of above-average economic activity thanks to (in part) the millions upon millions of tourists that swarm their beaches, stay in their hotels, patronise local restaurants and frequent their shops.
The positive relationship between tourism and economic activity (i.e. growth) becomes even more apparent in the chart below. For the year of 2023, Southern European countries that saw most of Europe’s inbound tourism scored significantly higher growth rates both in real and nominal terms. In fact, the trend line would suggest that for every time a country receives its population’s worth of tourists, real GDP edges 0.5% higher.
Correlation of course does not infer causation, but the link is strong. A caveat could be to consider Southern counties’ relative isolation from geopolitical volatility from the Russo-Ukrainian war, although in reality––except for the Baltic states––the energy shock was rather homogeneous across Europe.
I digress: tourism’s vital importance for many economies is undeniable. Entire industries flourish through the yearly intake of tourists, helping propel their respective economies. But can this dream go on forever? A promise of a generous tan and an endless flow sangria is an attractive promise, even too attractive. The industry that is so incredibly crucial to so many countries is now under threat, both from the outside and inside.
As was demonstrated by the global pandemic, tourism is quite sensitive to cyclical changes in the economy. Travel restrictions are a killer for business, and the industry depends on favourable global economic conditions: it’s a luxury people gift themselves, and trips abroad are placed on the back burner as soon as times become tougher.
Moreover, despite what the industry means for many countries, locals are starting to be fed up with it. Anti-tourism protests have been especially pronounced in Spain, with Barcelona, Seville, Madrid, the Canary and Balearic Islands seeing tens of thousands of protesters on the streets objecting to tourism. The issue? Mass tourism that is centered around reckless partying that treats its destinations with the same care as would be appropriate for a disposable cup. Destinations, once desperate to tap into the economic prospect of becoming hubs for international leisure, are now suffering from their success.
A third and even more important threat could irrevocably challenge the industry’s future: due to rises in temperatures caused by climate change, recent years have seen marked shifts in tourist patterns and seasons. Heatwaves discourage vacationers from visiting warm countries during the months of July and August, which may very well result in a future exodus towards more Northern destinations. Furthermore, prolonged periods of heat have been proven to disincentivise economic activity and spending (outside of areas with air conditioning), as well as worsening labour productivity and even inflation. Climate change is a real concern (for the industry and beyond), especially considering that the very act of travelling exacerbates the crisis.
Tourism, in many ways, is like a boat. Between tranquility and storm, it continues on a forward course without fully knowing what awaits behind the horizon. I hence ask myself: why with all the headwind and with a mutiny brewing within the (proverbial) crew does Spain want to add fuel to the fire? Why will the island of Mallorca, that saw protests 20.000 strong, host a global UN summit for tourism? Precisely because it needs to, for the future of the industry.
The third Sustainable Destinations Summit will take place on the island in the second half of 2024. Now, more than ever, it’s imperative to have discussions around sustainable tourism; sustainable for the society that receives tourism and sustainable for the environment. To implement solutions that do not endanger nature and to encourage a form of tourism that respects its destinations and highlights their cultural richness. To establish that tourism is not only a holiday week that once finished can be forgotten, but to keep in mind that destinations have a present and a future. A future that, if abused, will cease to exist.
Tourism, in many ways, is like a boat that collects gold coins along its way. We’ve discussed just how valuable the industry can be, helping bolster the economy even during challenging times. However, the coins are heavy. The more visitors a country takes in, the harder it becomes to manage. If one is not careful, the boat will sink.
In the face of adversity and a crisis of identity for the industry, it’s time to redefine our relationship with how we travel. We must do it in a way that does not alienate locals and respects the environment; we must do it in a way that does not jeopardise future generations’ ability to enjoy their holidays. When faced with an impending shipwreck, the safest thing to do is to change course.
Economitron 
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