Urban tourism: benchmarking the strategies

1. Urban tourism: benchmarking the strategies by Maksym Ivanyna, Bavarian Graduate Program in Economics

2. Introduction – 1/4 MOTIVATION • Objectives of the paper: • compile the existing literature and statistics on the European urban tourism • project it on the comparative analysis study of CEE and Western European cities • advantages of tourism against its negative effects • demand and the supply side of the urban tourism market • comparative statistical analysis between CEE cities and the cities of the ”old” Europe

3. Introduction – 2/4 PRESENT RESEARCH • ScienceDirect: 60 links starting from mid 90s, urban tourism was not interesting before • Law(1993), Page(1994) – activization of research due to economic reasons • Mostly specific case studies and statistical reports (often closed to the public), no specialized journal research is diversified in methodology and areas • CEE is unexplored

4. Introduction – 3/4 RESULTS • systemization of the literature • emphasis on comparison of CEE and WE cities ● • Tourism infrastructure in the CEE region is underdeveloped in almost all directions comparing with “old” EU • Novelty, low price level and, to a some degree, facilities for young tourists remain competitive advantages of the CEE cities

5. Introduction – 4/4 IMPORTANCE • tourism: 3% of the world’s trade volume • population is richer and more educated, transportation is cheaper and faster industry (especially, cultural tourism) is expected to grow further • tourism: major budget contributor & employer in some cities, • CEE: huge inflow expected due to novelty, but it is not irreversible ending for every city policy matters STRUCTURE OF THE PAPER (PRESENTATION) • Section 1: General Definitions • Section 2: Two Sides of the Moon • Section 3: Demand & Supply • Section 4: Conclusions

6. General Definitions – 1/3 TRAVELERS: AMOUNT AND CLASSIFICATION WTO forecast: • definitions of “tourist” are different • WTO: residents, tourists, visitors, immigrants • tourists make trips for leisure • visitors make trips for business (incl. conferences, summer schools, seminars)

7. General Definitions – 2/3 CITY ATTRACTIONS Jansen-Verbeke (1989): Primary attractions Secondary attractions

8. General Definitions – 3/3 DIVISION OF THE CITIES • Cultural products: cultural heritage, arts, creative industries • Size: villages, towns, cities, metropolises • Georgraphical position: Western Europe, CEE excluding Ukraine, Ukraine

9. Two Sides of the Moon – 1/2 ECONOMICS OF THE TOURISM • reasonable amount of tourists in the city – win-win game: tourists spend their leisure according to preferences + industry earns money (2bln US$ per day, 2005) • international tourism – net exports, domestic tourism – redistribution of costs • the main industry in some WE cities (Salzburg, Seville). Not in CEE – manufacturing is still alive + investments are too costly • big WE cities: replenishment of the city center. Not in CEE – lesser real estate density: centers are still vibrant and alive (Arena in Kyiv, WestEnd in Budapest) • profits from tourism reinvested • positive effects for residents: new jobs, investments in attractions, marketing • costs: overcrowded facilities – slowing down of the city life + wearing off + attracting of pickpockets, terrorists • costs: structural changes on the local markets – general price level, real estate prices, labour market • jobs created are seasonal, investments in tourism are inefficient – less so in cities

10. Two Sides of the Moon – 2/2 SOCIAL BENEFITS AND COSTS • understanding between nations – tourists may come back with investments, strengthening of national identity • creating a deep gap, cheap simulations of traditions, segregation of locals and tourists • change of behavior of both locals (globalization) and tourists (f.e. football funs) • to lesser degree in Europe. Surveys – positive perception of the tourism VISITORS • investments are greater, but profitability as well • low seasonality, bigger positive externality from investments • deeper understanding between cultures • attraction of youngsters: economically less significant, but – they are likely to come back + they will form future public opinion of the country

11. Demand & Supply – 1/6 STRUCTURE OF DEMAND - 1 • expanding industry: 450mln of tourists in Europe in 2005 (19% - in CEE), 4.6% annual growth in 2005 (10% in CEE), 11 from 18 WTO’s emerging destinations are in CEE • degree of “loadedness”: • 50% (56% in 1990) – tourists, 16% (15% in 1990) – business travellers • IPK international & ATLAS: usual city tourist - middle-age professional or manager with higher education and high income, share of youngsters was 27% in 2002 • Museums and historical buildings are the biggest attractions, possibility to meet new people and pleasant environment become important (20% of resp.) • KPMG(2006): CEE tourists - younger, less income, entertainment is important attraction

12. Demand & Supply – 2/6 STRUCTURE OF DEMAND - 2 • UIA: 9000 business events during 2005 • Coopers & Lybrand (1990): 4 reasons of choice (high standard facilities, prices, accessibility, attractiveness) • EUROBAROMETER(2002): 40% of resp. were motivated to travel by accessibility, price, safety level • successful city policy should include the development of primary attractions but also investments in extending and improvement of secondary attractions • transport: 45% of int. travels by air, 43% by road, in Europe role of cars and railways increases • accommodation: hotels are most popular, hostels – 13% of youngsters

13. Demand & Supply – 3/6 BENCHMARKING: PRIMARY ATTRACTIONS • supply exceeds demand on European tourism market cities have to work in 3 dimensions: enrich and improve their cultural heritage, refine secondary attractions, and promote the city • Primary attractions: developing museums, art galleries, theaters, concert halls • M – museums and art galleries, T – theaters and concert halls • quality is more important, but numbers testify about big potential for CEE cities to extend primary attractions infrastructure • prices decrease from West to East (20Euro – Emperor’s palace in Vienna, not much than 1 Euro in all museums of Kyiv and Lviv)

14. Demand & Supply – 4/6 BENCHMARKING: SECONDARY ATTRACTIONS - 1 • at the time when hundreds of cities possess terrific and must-see primary attractions, the secondary elements of the choice gain much more weight • roads and railways: quality of roads, speed and frequency decreasing from West to East, prices as well. The same with public transportation • A – cheap connections, H – hotels, Y – hostels, * Dublin – 78, Vienna – 0, ** London – 180 • cheap airlines: Prague, Budapest, Bratislava compete with metropolises, rest of CEE is lagging, some WE do not have at all. Ukraine is lagging

15. Demand & Supply – 5/6 BENCHMARKING: SECONDARY ATTRACTIONS - 2 • hotels: metropolises are out of competition, WE are ahead, Prague and Budapest are close, Ukraine lags behind • UIA: correlation with number of events (Paris – 1st place with 300 events) • hostels: CEE seem to grasp the niche, prices are lower there. Ukraine lags behind Q – quality of life, C – cost of living, - - not in top 50 • Mercer Consulting (2006): WE are ahead in Quality of life, certain degree of disparity in CEE between COL and QOL • KPMG(2006): Vienna – more quality, Prague and Budapest - cheapness

16. Demand & Supply – 6/6 MARKETING • ATLAS (2001): most popular sources for future travellers are family and friends (31%), internet (19%), guide books (17%) • hard to measure effectiveness of marketing policy G – links in Google, Q – quality of web-site • WE: quality and quantity combined • Gaps in CEE promotion policy: books on Ukraine, attractiveness of Budapest • prime task of city promotion – becoming unique (resource of novelty is getting exhausted very fast)

17. Conclusions • despite certain disadvantages tourism poses on the city’s inhabitants, urban areas in Europe are eager to develop this industry in the reasonable boundaries • the competition is getting increased, and novelty should be substituted by qualitative policies • cities need to develop both primary and secondary attractions • CEE cities are lagging behind the WE in a lot of aspects, touristic potential is not realized yet, hostels and cheap airlines are developed better • in order to be competitive cities have to innovate and create unique image, CEE should also improve infrastructure © All pictures are taken from private collections (landscapes of Lviv)