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Influence of Tourism on Local Destinations

Tourism generates wealth, and encourages new businesses and employment in local economies

The arrival of visitors is vital for many local economies, as it generates wealth, business creation and employment. But now, it also has other positive effects, such as the strengthening of local values, enhancing culture, gastronomy and traditions, the opening of areas to outside influences, and an increase in visibility and diversity. Experts from EAE Business School and Willis Towers Watson discuss this phenomenon.

08 Jul 2020

Juan Carlos Tárraga is Deputy General Manager with consulting firm Willis Towers Watson. He stresses that tourism plays a strategic role in driving the development of many local economies, “especially those whose business fabric is less diversified and whose tourism GDP is over 35%, such as the Balearic and Canary Islands.” But this dependence also occurs in other areas such as the Costa Brava, Sierra Nevada, the Picos de Europa or the Pyrenees in Catalonia and Aragon, as Alex Alegret, adds professor at EAE Business School and consultant to tourism companies.

The influx of visitors not only benefits travel agencies, hotels, and restaurants, but also helps to strengthen other businesses “such as transport, infrastructure, technology, and shops, including clothing stores, supermarkets, pharmacies, and garden and repair centres” says Alegret.

And, some areas are expanding their offerings with new attractions. “For example, the Costa Brava is promoting sports activities, El Hierro (Canary Islands) has been developing diving tourism, and Mallorca is popular in the Winter for cycling and running. Golf has also become more important in Mallorca, the Canary Islands, Andalusia, and the eastern Mediterranean coast. Palma de Mallorca is consolidating a model based around culture and museums.” Also, some hotels are making efforts to offer “ecological menus and locally produced food,” an offering that seeks to meet the demands of a growing segment of travellers, willing to pay more for it.

I should also mention tourism trends created by phenomena such as the Camino de Santiago. It’s an unmissable route for pilgrims, and Galicia and its neighbouring regions beat records every year in terms of national and international visitor numbers. Tárraga also pointed out that the appetite for being part of one of the routes that make up the Camino goes beyond the borders of Spain. “Spending by travellers on the Camino de Santiago is more than double that a conventional tourist in Galicia.  This aspect has stimulated the growth of numerous companies, both in the conventional hotel and restaurant industry, and others based on technology.” The fact is that tourism accounts for over 12% of GDP in Galicia and, according to some surveys, and pilgrims account for 2.3% of spending in this sector.

MICE Tourism

Another example of the economic impact is the tremendous value generated by conventions tourism in Madrid and Barcelona. These cities are two of Europe’s leaders for this type of meetings, and among the best equipped for them. “Their numerous international visitors can depend on good airport infrastructure in both cities, with a wide range of airlines providing good transport connections, and a wide and diverse hotel network, as well as important cultural and leisure attractions,” says this Willis Towers Watson expert.

To further enhance the impact of tourism in all regions, Alex Alegret highlights the importance of good data and knowledge management. This aspect is an effort that already involves a large number of technology clusters and specialised software and big data companies, and which depends on public-private partnerships. “Because of their knowledge of tourism and local needs, they are the most able to run projects that can revive the regional economy.”