Summary :

The Mediterranean (MED) region became a hot spot along the year 2011, continuing in 2012. The negative impact of the economic slowdown has been exacerbated by the uprisings in the North of Africa (NA) (Arab awakening), and by national debt episodes in Southern EU countries. Main challenges include increasing unemployment, growing levels of poverty, difficulties in the access to international borrowing, as well as the extension of socio-political instability. In this context, it is important to explore the role that competitive industries in the region could play in promoting economic recovery and, in general, settling the basis for social development. In this regard, the present investigation has been dealing with the analysis of the tourism industry in the MED region, and how it can contribute to the objective of regional development. Tourism activities attract new revenues, maintain country openness and cultural richness, reduce poverty by generating employment, and contribute to build infrastructures, reinforcing in this way social cohesion and stability of host countries. Moreover, as UNWTO data shows, in 2011 the MED region was the leading world destination, with 182 millions of tourist arrivals (18% of world share) and receipts of 176 billions of Euros (17%). In order to deal with such an ambitious objective, we have focused in the study of three salient destinations of the MED area: Spain, Turkey and Egypt. All three countries have important shares of the tourism industry in their national economies, and allow us characterizing the situation of the MED region.The first chapter of the study has been devoted to elaborate an overview of the relevant treats of tourism sector in these three MED economies. In general, we have seen that it contributes a relevant share on country GDPs, around 10-15%, creating significant employment levels (11%). It also promotes job opportunities for sensitive collectives of the society, such as females and young people, all above the mean of the economy. Equally, we have observed the need of improving qualification of the labour force in tourism activities for the region (not that relevant for Egypt). Main efforts should be centred on formative actions defined at official secondary and university levels. Besides, tourism activities show important interconnections with other sectors of the economy. Energy, construction, real estate, food-related products, financial services, and mainly cultural, recreational and sports activities are closely related to the tourism production process. Multiplying effects, direct plus indirect, of tourism demand are important for MED economies, and particularly for these related industries.
This is an important result, given that in many of these countries such industries have been suffering the impact of the crisis, and then tourism becomes a strategic activity for improving conditions in construction, finance and cultural sectors.Growth of tourism has been intense in the near past for the entire region, with rates well above those of the general economy for arrivals and receipts. Despite the slowdown of 2009, recovery has been significant and robust for tourism. The sector has become a pushing force for regional economies, perhaps one of the few activities with significant growth since 2009 shock. Situation is not that good at the North of Africa region, with all countries suffering the effects of the Arab spring episodes. Despite slight recovery of arrivals in some countries, as i.e. Tunisia, security level is now an issue for tourism industry in the area. Other destinations as Turkey and Spain have on the contrary received all these people redirecting their travels from North African countries, with increases over 10% in number of arrivals in 2011 and 2012. Main destinations of MED countries are in seaside areas, with new products emerging in interesting activities related to tourism industry. Medical and health tourism, cultural tourism in general, urban and city activities, nature-related activities, golf and sports, etc., are all new products showing two-digit rates of growth in recent years. All of them will be reporting increasing receipts to tourism MED destinations in the future, also allowing for a renewal of traditional supplies of sun and sand activities historically present in this region.In terms of the supply side, tourism activities face a need of increasing the average establishment size, in order to gain scale economies and efficiency. Growth of tourism supply has been important along the past years of economic boom, between the mid 1990s and 2007. As a result, numbers of establishments, level of employment, and total investments have grown intensely. It has allowed creating new employments all along the region, with more than 800,000 in Spain, and around 400,000 in Turkey. When the crisis began, adjustment of the sector has been of less importance for Spain and Turkey, with international demand supporting the activity level. On the contrary for Egypt, national awakening has clearly impacted the tourism industry, with consequences on employment, revenues, and infrastructure plans, and a major impact in the capital city of Cairo.
Another treat of the tourism industry is that of important internationalisation level achieved in last decades at the MED region. It has allowed increasing robustness of firms in that industry, with new establishments positioned in growing economies such as Asia and Latin America. All lessons associated to the process of becoming transnational companies have been also of salient relevance for the development of MED economies in the preceding years.The second chapter of the study has developed a macro approach to the determinants of tourism flows, with special focus on the MED region. By applying a gravity framework, we have seen the role of relevant socio-economic and political factors in pushing inbound and outbound flows of tourists. Main results have primarily shown the role of distance in promoting tourism. Tourist arrivals in MED destinations, and worldwide, use to come from nearby geographical areas. In MED region, the origin of tourists is majorly that of the EU and MENA countries (Gulf countries), and CIS countries as well (Russia mainly). For the rest of the world, tourists also travel along their continent of origin. Such an outcome results in several key policy issues: historical and social linkages between countries are relevant in promoting tourism flows (colonial ties, language, culture, belonging to the same region, etc.); geographical (and cultural) distance is also important in defining the size of bilateral tourism flows arriving to a single country. In the case of MED destinations, promotion campaigns should then be focused on potential clients from nearby destinations (EU, The Gulf, Russia, Eastern Europe), and on those coming from selected new sending countries (India, China, Latin America). Another result of this part of the study shows the relevance of political ties between countries in fostering arrivals of visitors: bilateral agreements, visa restrictions, and diplomatic relations are relevant variables in influencing the volume of tourism flows. The influence of visa restrictions is a novel result provided by the current research in tourism studies, and we have been able to improve estimation techniques for capturing this effect empirically. Basically, our model copes with (time and country) heterogeneity in estimation, by exploiting panel data methodology, and controls for all other bias potentially arising in a gravity framework, by including dyadic time variant and invariant effects, and multilateral resistance terms. As the literature has shown, it allows us to technically improve the measurement of such an effect in regards to previous studies. Further, the last type of effects captured by our model shows the role of economic ties in promoting arrivals of people. In this respect, bilateral trade and migration flows also increase the volume of tourism arrivals as we have seen.As a general result, we have shown that the closer the relationship between countries of origin and destination of tourists, the higher the number of bilateral travels, either outbound or inbound flows. In terms of the visa effect, it appears to be restricting the arrival of tourists to developing countries, as well as flows of travellers departing from both high and low-income countries. Particularly, visa restrictions are shown to play a role in reducing inflows to Eastern Europe and Central Asia, Latin America, MENA countries and Sub-Saharan destinations, as well as outflows from citizens of Eastern Europe, Central Asia, Sub-Saharan countries, and Western Europe and North America. This is an important result for MED region, given that visa restriction can reduce the arrivals of tourists coming from Eastern Europe who increasingly travel to this destination. Moreover, inbounds to MENA countries are clearly affected by visa restrictions, reducing in 23% the number of arrivals. Visa requirements also appear to be restricting entrances from Western Europeans and North Americans, both being important visitors of Tunisia, Egypt, Turkey and other countries of MENA. The impact of visa restrictions seems to reduce around 20-30% total arrivals and departures arising in these areas. Such a result presents clear policy implications, given that any improvement in visa facilitation would render a remarkable growth of future arrivals and receipts for MENA countries.
As the model shows, once controlled for time invariant country-pair fixed effects (mainly capturing geographical and cultural linkages between origin and destination countries), visa restriction is the major effect in explaining volumes of inbound and outbound travel flows, well above the effect of political and economic bilateral ties.The last part of the study implements a microeconomic approach for capturing factors explaining the performance of tourism industry in the MED region. It is carried out along two chapters: the third chapter is devoted to estimate main factors driving expenditure of tourists, and the fourth chapter focuses on the analysis of variables influencing satisfaction and loyalty behaviour of tourists. Both issues appear to be relevant in policy terms, providing pivotal information for the future sustainability of the tourism industry. The third chapter of the study deals with factors explaining total expenditure of tourists. We have analysed the daily expenditure behaviour of tourists, and its relation with the length of stay of visitors at destinations. In general, main covariates for the expenditure equation include the characteristics of destinations, those of the tourists themselves (individual profiles), and a set of trip characteristics. Explanatory variables include several dummy variables to reflect whether the tourist performed or not different activities during the stay. We also control for socioeconomic tourist characteristics, such as age, education level and income level; and trip characteristics, as type of transportation, type of accommodation, group size, company, main reasons of the trip, previous visits, and trip duration. Finally, we include year dummies to account for variation in the business cycle, month dummies to account for seasonal effects and destination dummies. In running such an exercise we have built on survey data collected for the countries of the study.Main results confirm the relevance of all these factors in driving daily expenditure of tourists. Seaside destinations, as those of the MED region, should embark themselves in developing new supply of activities, or tourism products, to complement the traditional offer based on exploitation of natural advantages. Important activities increasing average expenditure of tourists per day are those of playing golf, casinos, sport events, and enjoying gastronomy. All of them are activities with presence in the MED coast. Gastronomy is one of the competitive advantages of the region, and there has been a boost in golf-related products along these destinations. Sport events are increasingly a present tourism supply in different cities of the Mediterranean. Correspondingly, some of these recently emerging supplies are helping to increase daily expenditures of tourists visiting the Mediterranean coast. Other main purpose of the study was analysing trip duration, as it constitutes the other pivotal piece explaining total revenues. We have found that trip duration has a negative relationship with daily expenditures, that is, longer trips are associated with smaller daily expenditures, as one will expect. The most relevant case of study here has been that of tourists coming to hotels versus those using own properties as accommodation. For these two groups, we have seen that stay and daily expenditure behaviour vary considerably. This result remarks the different approach to sun-and-sand vacations developed by these two groups of tourists, that conform more than 80% of total visitors coming to MED destinations. A general outcome here remarks that, when one wants to define a target of total receipts for a particular destination, in terms of a sustainable horizon, it is necessary to find a balance between stay duration and daily spending of tourists.Additional findings also confirmed that socio-economic and trip characteristics are important factors driving tourist expenditure choices. Socio-economic features of the tourist influence expenditure mainly through the income level. High-income tourists appear to spend 50% more than low-income groups in the case of Spain, and 18% in that of Turkey. The relative level of wealth of the country of origin of tourist (proxied by GDPpc) also seems to affect her spending capacity. Age and level of studies show second order effects, although affecting expenditure levels too.Trip characteristics however appear as the major drivers of individual daily expenditure of tourists. The most important factor is shown to be the type of accommodation chosen by the tourist. Tourists staying in a second-home spend 79% less each day than those staying in hotels. The result is quite striking since accommodation in a second-home has become the option preferred by an important part of tourists visiting the Spanish MED coast. In the Turkish case, accommodation choice is mainly that of hotels in more than 90% of cases.
In average, total expenditure in Spain is shown to be of 748 euros per visit (100.91 per day, times 7.42 days of stay), while in Turkey it is of 720 euros (72 ? per day, times 10 nights of average stay). In this sense, both destinations show similar total expenditure levels for the average traveller, although in Turkey stay is slightly longer, and in Spain daily expenditure is a little bit higher. In contrast, tourists employing second-homes in Spain stay for a longer period of more than 15 days, with lower spending per day, although the attachment and loyalty to destination increases, and they became highly repeaters in their annual vacation time, as we will see in chapter 4. In this way, and despite some differences arising between both destinations, similarities are very present along the MED coast. Other important trip characteristics leading spending are those of the main reason for the trip (+26% in spending if the visitor comes for business purposes), group size (+44% for people coming alone), and travel companion (+ 21% for friends trips). For the case of Turkey, characteristics of the tourist, as education level, age, income level, GDPpc, as well as trip characteristics, as companion, group size, and purpose of the visit, are shown to be the main drivers of the expenditure behaviour of tourists.For the Egyptian case, we have not been able to access the micro data necessary for running both exercises of chapters 3 and 4, because of confidentiality issues alleged by the institutions compiling the information. In this way, we have been able to achieve a descriptive approach to both issues of expenditure and satisfaction-loyalty (see Chapter 1). In general, we have found that expenditure issues appear to be similar to those of visitors in Spain and Turkey, in terms of spending per day (around 100 US$), stay duration (10-11 days), and pursued activities by tourists. It has been identified that tourists spend on average 31% of their total expenditure within hotels and 69% of their expenditure outside hotels, with major expenditure outlets in entertainment and culture (19%) shopping (18%), and other food and drinks outside hotel (11%). Yet this pattern differs by the origin of tourists, where tourists from Arab countries, namely the Gulf Region (Saudi Arabia, Kuwait, United Arab Emirates, Bahrain, Qatar, and Oman) tend to have a different pattern of expenditure in comparison with tradition Western visitors (mainly from the EU and North America). The reason behind different pattern of expenditure for tourists of Arab origin has to do with their length of stay and the frequency of visits, where Cairo is a popular summer resort for them, and hence they tend to stay for longer times and the frequency of visits is higher.Chapter 4 is the final part of the study, including the analysis of factors influencing perceived trip satisfaction of tourists, and loyalty to destinations, as key variables ensuring future competitiveness and sustainability of MED tourism industry. Main results of the study show how perceptions of trip satisfaction are closely related to the idiosyncrasy of the destination, and that of the particular profile of tourist. First, it is important to provide the potential visitor with a relevant set of information about the destination previously to the visit: prices, places to go, main locational advantages, lodging and gastronomy supply, activities to develop, how to arrive, etc. All that information will help the tourist to plan the trip in a more accurate way, hence improving the matching between expectations and realisations, what increases trip satisfaction. Second, promotion efforts and management of visitors must be clearly focused onto some important features of the visitor, such as the country of origin, length of stay, level of income, and activities pursued in vacations. We have confirmed again that main advantages of MED destinations, such as gastronomy, cultural supply, historical patrimony, water sports, weather smoothness and warmth of people, are undoubtedly pivotal assets to be maintained, reinforcing the attractiveness of the region for worldwide arrivals. Age of the tourists and type of accommodation supply predominant at destinations would also determine the level of loyalty of visitors. Finally, the image created by a single destination, that builds on own main advantages maintained year by year, is a salient variable influencing both satisfaction and loyalty of tourists. An additional result has proven the close relationship existing between satisfaction and loyalty dimensions of tourists, this being a central finding of this chapter, and important to be accounted for in when defining tourism policy guidelines.The comparative analysis of tourism demand for Spain and Turkey also highlighted the differences arising between the profiles of tourists visiting these two leading destinations. In this way, it appears to emerge some kind of endogenous relationship between the pattern of specialization of the destination (accommodation, infrastructures, supplies, activities) and the resulting loyalty attitude of visitors. For the case of Spain, tourism demand is more focused on arrival of couples and people coming alone, with medium-high income level, going to their own second-homes, and staying for 10 days at least. This type of tourist presents high levels of satisfaction and marked patterns of loyalty and attachment to the destination. In the Turkish case, family visits are the most representative group of visitors, staying for 2-8 days, mainly going to hotels, and being of a younger age. Correspondingly, this type of tourist is characterised by less loyalty behaviour, although their level of satisfaction is quite similar to the Spanish case, both destinations reaching high levels of declared trip satisfaction by visitors. For Egypt, in general, a number of problems facing the industry were identified. They include level of cleanliness, environmental protection, quality of services of domestic flights and transports, and lack of public supplies (toilets, tourist info points, etc.).
Other areas of dissatisfaction of tourists were related to weakness of infrastructure’s services levels, unsustainable environmental conditions, safety and security conditions, tourism transport services (airport and bus drivers), and pollution and traffic problems especially in Greater Cairo. These were issues causing relatively high level of dissatisfaction in tourists. The activities that have received relatively high level of satisfaction included quality of accommodation facilities, banks, customs and immigration authorities, beauty of the historical patrimony, cultural richness, usual warmth of people, and great diversity of destinations along the country (Exotism of the Nile Cruise, Cairo city life, Alexandria seaside, and Red Sea and Sinai supplies). Finally, contributions of all chapters of the project have led to important policy recommendations enriching the debate on EU-MED Tourism industry and development issues.