What is the impact of hotels on local economic development?

What is the impact of hotels on local economic development? Applying value chain analysis to individual businesses.

By Jonathan Mitchell, Xavier Font and ShiNa Li

Dr Xavier Font is Reader from Leeds Beckett University & Dr ShiNa Li is a Senior Lecturer from Leeds Beckett University, a member of the Tourism Concern academic network. Jonathan Mitchell is the Head of the Private Sector and Markets Programme at the Overseas Development Institute (ODI) in London.

The impact of mainstream tourist hotels on destination economies is clearly an important question for public policy-makers wishing to develop robust tourism policy. This research paper adapts the methodology of ‘value chain analysis’ to measure the local economic impact of a large, single tourism enterprise, to show how to generate commercially realistic data using an analysis of a 1,000 room All-Inclusive resort in Southern Turkey in partnership with TUI UK and Ireland.

The data breaks down ‘package revenues’ according to their beneficiaries and identifies areas for improvement. Researchers further report and reflect on a 6 month evaluation of a tour operator-hotel partnership to deliver on a set of positive recommendations arising from the date to improve future impact.

The figure above outlines the value chain of a holiday village in Turkey. Results found that the global economic activity generated by a Holliday Village in Turkey (including selling packages overseas, flights to and from Turkey, the hotel operation, rents and tourist discretionary spending is over €46m in one holiday season. 45% relates to expenditure taking place outside Turkey – principally activities coordinated by the outbound tour operator, such as selling holiday packages to tourists and transporting tourists from their origin to Turkey. The remainder, approximately 55%, is spent within Turkey at the hotel and by tourists in the local economy. At a macro-economic level, Turkey benefited significantly. Of the €26m spent within Turkey, only €1.8m is represented by imports. €5.0m benefited the regional economy; >€3m from discretionary spending, with most of the remainder from hotel staff and utilities. Only €1m accrued in the village (2% of the total value chain).

To learn more about tourism courses at Leeds Beckett University or for further details of this research paper, contact Tourism Concern at campaigns@tourismconcern.ork.uk or ShiNa Li at S.Li@leedsbeckett.ac.uk.

This article is published at Anatolia 26 (3) January, pp. 347-358​.

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