The Impact of Mega-Events on Tourist Arrivals - Term Paper Example

?How much London gain from Tourism The economy of London has gone through much transformation since the 1980s characterized by a diverse population and an economy that is increasingly dualistic. The strength of London as an economic powerhouse of the United Kingdom lies in its historic position as the political and economic capital of the nation due to its openness to international connections. This has contributed to the making of London as a major economic powerhouse through the acceleration of international economic integration as well as the move towards a service oriented economy in which London had established strength that breeds a virtuous circle. The success has also been attributed to the deregulation of the market and exchange controls. London remains a pre-eminent global city for doing business and attracts millions of tourists every year round, but this has come under threat not only from the economic upheavals but also from the emergence of new business and tourism hubs such as Dubai and Mumbai. London is ranked as the most popular city in the world and attracts millions of tourists every year who travel to London to see and admire the impressive monuments, exploring the vibrant and diverse culture of the inhabitants of the city or pay a visit to the historical sites in London (LDA 2009). Tourism is a key driver of the economy of London attracting 15 million visitors of overseas visitors who were staying and 11 million domestic visitors staying in the year 2008 alone. In addition, several surveys estimate that about two hundred million visits by tourists are made to London either within the capital or within the outskirts for the numerous attractions, art exhibitions, historical sites and other tourist attractions. Tourism and related activities helped support 253, 000 employment opportunities and resulted in expenditure by visitors amounting to U. K. ? 22 billion which consisted of U.K. ? 8 billion is generated by staying overseas visitors. While much of the tourism takes place at the capital city at the inner sections, the significance is felt as a whole including the boroughs. The London’s visitor economy grew steadily in the leisure market in the period 2002 to 2007, making a quick recovery from the adverse effects of the terrorist act of September 11 characterized by a reduction in the number of staying tourists. Nevertheless, the number of visitors to London from overseas declined from 15.3 million to 14.7 million in the year 2007 while that of domestic visitor numbers rose from a figure of 10.1 million to 11.3 million. In terms of the economy, the revenue generated from tourism towards the economy of London comprise about 10 percentages of the gross value added income of London and the projections is that the amount spent by tourists in London costs about U.K. ? 15 million per year. The statistics also show that about 13 per cent of the people who work or are employed in London are in the tourism sector alone and is predicted to rise dramatically due to the marketing strategies that have been put in place to position London as an ideal tourist destination (LDA 2009). Some of the famous tourist attractions in London include Buckingham palace that attracts about 15 million tourists per year, Green Park and St. James Park, the Victoria and Albert Museum the leading museum of its category globally, the British Museum, the Tower of London along River Thames, the Tower Bridge and the Big Ben. However, the cultural sector of London is the major contributor to its economy in terms of the income and the jobs it generates to the citizens as many tourists comprising 70% cite it as the major reason for their visits. This is achieved from the high number of overseas visitors who flock into London to see and visit its numerous attractions and the central as well as the management of London has played a key role in the provision and support of the cultural heritage of London to ensure fair access. When viewed as a cultural metropolis, tourism contributes to the employment of about half a million composed of workers who work in the creative industries situated in London. This represents a figure of about 25-35% of the total number of persons who work in the creative industries sector in the United Kingdom contributing 3.6% of the annual growth from the year 1994-2005, and generated a GVA of U.K. ? 18.5 billion in the year 2007. The creative sector that also operates hand in hand with tourism in London has a positive impact in offering employment to a majority of the citizens of London as a whole. In the year 2010 alone, advertising comprised 9%, architecture 7%, design 7%, music, arts and performance 14%, publishing 20%, radio and television 14%, photography 6%, software and electronic engineering 21% as a support to the tourism in London (LDA 2009). The city of London is also unique in the sense that it is considered as a global financial centre thus attracting those that are involved in international finance. Through the visitors that visit it to conduct international business and finance, it receives visitors who contribute much to its broader economy. By being a global financial centre, receiving visitors involved in international trade and finance, London has derived numerous benefits to its economy, for example, in terms of banking, London handles about 50% of the total investment banking activity in Europe. It is also the world’s largest international insurance market with a gross premium income of U.K. ? 24.5 billion as at the year 2007 and the largest foreign exchange market in the world with a 35% of global turnover in the year 2008 managing 80% of hedge funds in Europe. The city also has the largest number of foreign-listed companies accounting for 70% of trading in the international bond market. The net effect of this is increased job opportunities to the residents of London and increase in the economy of London as a whole. It is therefore true to state that the London tourist economy plays an integral role in helping London provides for its key objectives financially as well as getting it out of the economic downturn occasioned by the global financial meltdown. This calls for a targeted marketing activity that can provide a rapid economic return to London’s dwindling fortune as a tourist destination, support to businesses, job opportunities and investor confidence. Though tourism is at times viewed as a low-wage sector, it provides many local employment opportunities with transferable skills that may include thousands of entry level jobs for those with inadequate qualifications. Due to the appreciated positive gains, that tourism brings to the economy of London that it has developed a London Tourism Action Plan 2009-2013 that sets out the broader vision and strategy for running the tourism sector to ensure that London remains a destination of choice for tourists. Through this strategic plan, the city and other stakeholders have appreciated the importance of tourism, the achievements and what must be done in order that tourism benefits London and the entire United Kingdom economy. The influence international events have on long-term tourist trends Tourism being one of the leading growth sectors in the international services trade and is at times greatly affected by international events that may be classified as global or mega events. These events are large-scale cultural events that in most cases are commercial or sporting in nature and have a very popular appeal and international significance and examples include the Olympic Games and the FIFA World Cup both held after four years. It also includes the Commonwealth Games and the ICC Cricket World Cup that have attracted a global audience thus shaping the patterns of tourism while at the same time highlighting new tourism destinations. International events usually have net economic benefits to the host country right from the time the bid to host the event is awarded to the periods after the event. Preuss (2007) argues that, while the costs and benefits whether tangible or intangible have been inconclusively debated, the focus has been turned on the aspects of the international event that can be quantified such as the behaviour of tourists, both during and after the event. Evaluating the behaviour of tourists from a comparative perspective enables us to have a proper examination of the displacement of tourists or how they crowd out (Matheson 2002). This is because whereas some tourists may be attracted to a particular or specific event, other tourists who are on a visit in the region may change their visit schedules to tour the area as the event goes on depending on the demand or supply of the tourism products. The problem however arises when an attempt is made to quantify these crowding-out effects as the behaviour of tourists is usually affected by numerous factors such as the country and the timing of the visit Events such as hosting sports have a direct effect in the long-term tourist trends and have economic advantage to the host country. From the perspective of the organizers of the event, tourist might form the basis of their target market and therefore it becomes necessary to ensure that it is attractive to the targeted segment as well as meeting the needs of the tourists. Hosting a large and popular international event is often seen as the ideal way for a city or a country to put itself and advertise on the world map and therefore international events such as the Olympic Games are perceived as the perfect methods to create and recreate tourist products that can attract tourists on a large scale. Fourie and Santana-Gallego (2010) have in their research found that when a country has won the bid to host an international event, there is a significant gain in the number of tourists in that year that the event is held majorly from the event-specific tourists. His includes those who visit the country to attend the specific event and those that change their behaviour to a different time but within the same year. Further, they have found that there is little gain in the number of tourists within three years after the event has been hosted, while the same research also shows that the number of tourists arises when the day of the event nears. Their statistics is that tourism and related activities is at a figure of 4% three years prior to the event, 7% two years prior to the event and an increase of 16% one year to the holding of the event (Fourie and Santana-Gallego 2010). The 2012 London Olympics will make a U.K. ? 16.6 billion contribution to the U. K. GDP between the years 2005-2017 of which 12% is derived from tourism activities. The games are projected to generate a net increase in visits by tourists to a number exceeding ? 10.8 million in the period 2005-2013 with extra expenditure of 2 billion, 1 billion being generated after the games (Oxford Economics/Lloyds Banking Group 2012). The estimated benefits in tourism trend are from 2005, when Great Britain won the bid to host the Games to the next five years after the Games and comes mainly because of the construction of sites for the Olympic Games sites that would boost tourism. According to Lloyds TSB, about thirty percentages of the gains estimated to be about U. K. ?5 billion will be realized five years after hosting the event when the sites used for the games are converted to other uses and tourism continues to see a remarked boost. The “happiness effect” felt at these international events and games have the effect of boosting the mood of the public thus encouraging spending by consumers who later come back as tourists even after the event has ended. The 2012 Olympic Games also attracted 10 million visitors that included 1.2 million visitors from overseas as well as generating estimated revenue of U.K. ? 2 billion of GDP across England, Scotland and Wales through game-related tourism. The International Olympic Committee (IOC) argues that more visitors are drawn to Olympic venues after the exposure that they get during the games cementing the argument presented in the studies by Solberg and Preuss (2006) that states that there is a positive correlation between hosting an international event and increased tourist numbers. Other researchers have also found that holding or hosting an international event promote tourism but this is largely dependent on the type of the event that has been held, the level of development of the country holding the event, and whether the event is held during the peak or off-peak season (Fourie and Santana-Gallego 2010). Fourie and Santana-Gallego (2010) have also concluded that the level of tourism from those countries that are participating in the event is higher as compared to the tourism from those countries that did not participate in the international event. They state that the size of the tourism crowding out depends on the season when the event is hosted as events held during the peak season have lower tourist numbers as compared to those held during the off-peak season that attract higher tourist numbers. Conversely, their research found that it is about not only how expensive an event is, but also the size and the development of the host country, the type of event, the timing and the participating countries that determines the tourist arrivals. Therefore, it can be said that from the perspective of the tourism economy and the hosting of international events, there comes the potential for a remarkable rise in a number of important destination growths reflected by increased number of tourists. It is therefore important that those hosting the international events maximize the short-term efforts that have been put in place for the long-term benefit of the country as a tourist destination. This can be achieved by directly reflecting and driving the essence of destination branding through uniting the people in that particular destination to build and invest on the legacy of the tourism sector. The benefits of hosting large international event influences the tourism trends of a particular place and are wide reaching, penetrates deeply and the economic benefits felt for quite a long period. Reference List Fourie, J., and M. Santana-Gallego .2010. “The Impact of Mega-Events on Tourist Arrivals,” Working Paper 171, Universiteit Stellenbosch University. London Development Agency -LDA. 2009. London Tourism Action Plan 2009-13. London Development Agency Matheson, V. A. 2002. "Upon further review: an examination of sporting event economic impact studies." The Sport Journal 5(1): 1-4. Oxford Economics and Lloyds Banking Group, The Economic Impact of the London 2012 Olympic and Paralympics Games, July 2012. [Online] Available at http://www.lloydsbankinggroup.com/media/pdfs/lbg/2012/Eco_impact_report.pdf [Accessed on July 9, 2013]. Preuss, H. 2007. FIFA World Cup 2006 and its legacy on tourism. In R. Conrady & M. Buck (Eds.), Trends and issues in global tourism 2007 (pp. 83–102). Berlin, Springer. Solberg, H.A., and H. Preuss 2006, “Major Sport Events and Long-Term Tourism Impacts,” Journal of Sport Management, 21(2), 215-236. Read More