The Economics of Tourism in Host Communities

D

IMITRI

I

OANNIDES

Department of Geography, Geology and Planning, Southwest Missouri State University, Springfield, USA

Introduction

A few years ago, a team of consultants shocked the New York sports commu- nity by recommending a relocation of the Yankees baseball team from the Bronx to Manhattan’s West Side. Their proposal called for the construction of a multi-purpose arena with a retractable domed roof for baseball, football, concerts and conventions. The estimated cost for the entire facility was a staggering US$1.06 billion. The rationale for the costly relocation of the Yankees was that ‘a new ball park along the Hudson River would produce a significant increase in attendance, higher prices for luxury seats andan enhanced image for New York City’ (New York Times, 1996) [emphasis added]. Proponents of the project, including George Steinbrenner, the Yankees’ owner, offered a number of reasons for moving the ballpark to Manhattan. Among them was the contention that a downtown location for a major sports facility would reinforce Manhattan’s existing entertainment district comprising the Javits Convention Center and the ongoing redevel- opment of the ‘theater district’ on Times Square and 42nd Street by, among others, the giant of the entertainment world, the Walt Disney Corporation (Bressi, 1996).

At the time of writing, the final decision as to whether the New York Yankees will move from their home of many decades had not been reached.

Not surprisingly, there has been much opposition to the plan by numerous people and organizations. Nevertheless, George Steinbrenner and the then Mayor of New York City, Rudolph Giuliani, stated that they did not want the Yankees’ options for relocating outside the Bronx to be limited and clearly

would be more than happy to see the proposed new sports arena in Manhattan.

New York’s efforts to retain a sports team and develop a substantial convention/entertainment district replicate trends that have become all too familiar throughout urban America over the last two decades, namely cities’ efforts to promote tourism (Judd, 1995). Between 1992 and 1995, US cities spent over US$1 billion in subsidies to entice or retain sports franchises (Lever, 1995). Indeed, as Judd (1999: 45) argues:

by the end of the 1980s, it could be safely assumed that no owner in any of the professional sports would ever agree to build a stadium with private dollars.

Owners have come to expect other subsidies as well, in the form of guaran- teed attendance minimums, the construction of luxury boxes, and control of stadium merchandising.

More often than not, new sports stadiums are built near a city’s down- town area so they can become part of a broader city centre entertain- ment complex. Recently, Baltimore enticed the Cleveland Browns (now the Ravens) football team with a publicly funded 70,000-seat stadium located close to its Inner Harbor entertainment complex. Cleveland itself has built a new downtown stadium for a new Browns football franchise.

The ongoing battle for professional sports teams is one of numerous efforts undertaken by communities throughout the USA and worldwide to boost visitor arrivals. Other projects include the development of attractions like museums, aquariums and art galleries. The author’s adopted home town of Springfield, Missouri, is currently constructing the ‘American National Fish and Wildlife Museum’, a US$40 million project designed by Cambridge Seven Associates Inc. Proponents of this publicly funded project believe that once it is completed, it will attract approximately 1.5 million visitors a year and produce US$37.7 million in economic impacts. They base their estimates on the performances of similar facilities designed by the same firm, including the Tennessee Aquarium that attracted 1.5 million visitors in its first year of operation and the Baltimore Aquarium that has drawn an average of 1.4 million visitors a year since opening in 1981 (Cambridge Seven Associates, 2000).

Localities’ efforts to draw tourists do not end here. In an attempt to lure the lucrative business travel market, numerous middle-sized and larger cities throughout the country have spent enormous sums of money to compete for meetings and conventions (Judd, 1995). This is hardly surprising considering the size of the ‘meetings and conventions’ business.

Between 1980 and 1987, the number of convention centres increased by 37%, exhibition space rose by 60% and by the end of the decade, the industry generated approximately US$44.5 billion per annum (Zelinsky, 1994). In 1992, various associations collectively spent US$32

billion for ‘off premises meetings and conventions’ (Judd, 1995: 179).

Almost every city with a population above 250,000 now offers convention facilities, often within or near the central business district. Major cities normally have a comparative advantage in attracting major national or international conventions because they offer diverse attractions and supporting tourist facilities. Conversely, smaller towns have the benefit of lower costs and are often successful in attracting lower profile, regional meetings.

Yet another increasingly common form of development that cities use to attract visitors has been the downtown festival mall or waterfront redevelopment project. So many attempts have been made to emulate Rouse’s Faneuil Hall (Boston), South Street Seaport (New York), and Union Station (St Louis) in downtowns throughout North America that the terms ‘rousification’, ‘rousilization’ and ‘faneuilization’ have found their way into the urban planning lexicon (Chang et al., 1996). Similarly, John Portman’s ‘cities within cities’ (Judd, 1995: 183), such as Atlanta’s Peachtree Center and Detroit’s Renaissance Center, have been replicated in cities from Dallas to Minneapolis. Just as in the case of sports stadiums, cities have heavily subsidized these downtown festival malls through pro- grammes like community development block grants, urban development action grants and property tax abatements.

Tourism’s rising popularity as an economic growth strategy is not limited to large cities, however. Over the last few years more small com- munities have become major destinations on the tourist trail. Places like Pigeon Forge, Tennessee; Branson, Missouri; and Jackson, Wyoming; each having a resident population of less than 5000, but attracting more than five million tourists annually. Even though rapid tourism growth has burdened these communities with undesirable environmental and social effects, the industry’s impressive economic performance has reinforced the desire of community leaders in hundreds of other small towns around the nation to pursue tourism.

The examples discussed in the preceding paragraphs indicate that policy makers, planners and community leaders throughout the USA and the world have begun to pay serious attention to tourism as an economic panacea. The question is why? What accounts for tourism’s growing popu- larity as an economic growth strategy, particularly over the last two decades?

Why are civic leaders ready to spend hundreds of millions of dollars, often without conducting rigorous cost–benefit analyses, to attract visitors?

Perhaps, more important is the following question: do the economic impacts of all these programmes justify the huge outlays of funds? These are the focus of this chapter, and the following sections examine these questions in some detail. Moreover, an attempt is made to examine the eco- nomic impacts of tourism in destination communities within the broader framework of sustainable development.