Economic Social Cultural Environmental And Political Impacts Tourism Essay

Undeniably, events are significant motivators of tourism and their impacts play a crucial part for destination competitiveness, especially when having to deal with unique planned events (Getz, 2008). It must be said that tourism is one of the most prosperous industries, which evolved especially over the last 50 years. It can be defined as a human activity that includes human behaviour, use of resources, communication with other people, economies and environments. It also includes physical movement of tourists to locations, which are not their permanent living houses (Bull, 1995). There are a lot of components of the tourism industry that can add to a country’s value and mega events are one of them. An exact explanation of the term mega event does not exist, however they can be defined as short-term tourism events of a large scale aiming to create new or even renew investment in host cities, thus projecting a positive image of the city (Greene, 2003).

Furthermore, mega events can be described as global events and the requirement for a specific city to host such an event is to bid to ‘win’ it (Getz, 2008). They are usually managed by national governments and international non-governmental institutions and can be classified as significant components in reports of cultural behaviour (Roche, 2000). There are a lot of aspects of impacts resulting from mega events and some of them can be economic, social, environmental, cultural and political. All these can emerge prior to the event, during the event or even after the event, and they can be either or both positive and negative impacts, operating both in the short-run and long-run, that will be beneficial to a tourism destination or act as a threat to it. Additionally, they can bring relatively positive economic effects as well as boost tourism from the time that the bid to host the event by a city has been won, until long time after the event (Williams and Shaw, 1998). The magnitude of these impacts depends mainly on the host city’s management methods, especially by the government, in its effort to impose successful strategies to strengthen the positive impacts, while trying to keep the negative impacts to a minimum. Hosts mostly expect to create strong legacies that will last a lifetime, and job creation, increase in tourism figures, improvements in infrastructure, rise in the level of GDP and increased demand for commodities are included in their main expectations. Investing in sports venues, various tourism services and improving transportation might trigger economic growth, higher employment levels and renewal of the host city (Sakai, 2006). They also consider mega events as projects that give them the chance to built up a superior reputation, validated by measuring the tangible benefits and deducting the tangible costs from them(Kearney, 2005).

It must be highlighted that mega events play a crucial role in promoting a tourism destination and the Olympic Games are one of the best examples of such events. Their history dates back to 776 B.C. in ancient Olympia Greece and during that short time of the event ‘sacred truce’ was taking place, wars were stopped, and roads were becoming toll free, exemplifying their importance (Holloway and Taylor, 2009). I will be using Olympic Games throughout my essay to demonstrate what such an event can bring to a destination and specifically analyse the economic impacts of the Olympics on tourism destinations.http://www.twip.org/photo/europe/greece/photo-5255-08-03-06-14-31-05.jpghttp://www.flutetunes.com/img/posts/olympic-truce-emblem.jpg

The Olympic Truce Emblem

The Panathenaic Stadium in Athens, Greece

A closer look will be taken to the case of Sydney Summer Olympic Games 2000, where the government used a unique until then strategy undertaken by a host with a free market economy. All of these were done in its effort to enhance the positive economic impacts and reduce the negative impacts. Its initial strategy was to attract as many as possible tourists to the event and induce them to travel in other places in Australia, thus enhancing its tourism industry. The second strategy was to generate strong bonds in order to increase its ability to create tourist business and the third strategy was to make Australia a more attractive destination where three types of visitors were of high importance. These were leisure tourists, business visitors and MICE (meetings, incentives, conventions and exhibitions) visitors. It must be highlighted, that MICE visitors can bring the more money into a country while business visitors establish new business into the local economy and leisure visitors contribute towards the local economy by travelling around and using the local commodities. The returns from spending in business benefits were more tangible and persuasive resulting to greater planning in favour and in funding of economic effects by both federal and NSW governments as well as the Australian Tourist Commission (Cashman,2006).

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It is important for each Olympic Games to create something new and leave a great legacy behind them. For the case of Australia the main legacy that authorities wanted to create, was more tourists visiting the country, not only during the event but especially after it (Chalip, 2000). A huge crowd is attracted by the Olympic Games which consist of groups of people such as spectators, media representatives, members of the International Olympic Committee (IOC), sponsors and athletes. Through the extensive media coverage, a host city’s image may be reinforced or even altered affecting tourists’ image about the city (Hall, 1989) and an encouraging image of a host city might be a reason to attract both national and international tourists (McManus, 1999). About 1.6 million people were estimated to visit Australia between 1997-2004 by the Tourism Forecasting Council (Chalip, 2000) and all these tourists were expected to inject a huge amount of money for circulation into the host country’s economy in both short-run and long-run, where most of the money would be coming from television rights, ticket sales and general use of commodities. It was also predicted that 150,000 jobs would be created through the money spent by tourists and other visitors.

What is more is that people involved in the Olympics can later use their skills to enter the workforce if there are jobs places available to them, but all these depend upon the success of the event and if people’s skills are in a certain manner that can be used in the future without additional training cost needed to incur. There is evidence to prove that during Sydney 2000 Olympics US$3billion was generated in the local business sector (Kearney, 2005). It must be added that Australia was expected to gain AUS$6.5billion from the games during the period of 1994-2004.

The opportunity of attracting more tourists prior, during and post the event, like in the case of Barcelona Olympic Games 1992, where tourist figures increased a lot especially after hosting the Olympics and making it an established tourist resort, enables tour operators to create more and better holiday packages that can be offered to national and especially international potential visitors and thus improving their economic wellbeing, as well as bringing more money into the local economy. Added to these, the city government of Sydney in a combination with private investment invested a huge amount of money in their effort to expand the Sydney airport, improve the city’s roads and expand hotel room capacity by 25% (Chalip,2000). It can be deduced that these investments were aiming to attract more tourists, event visitors and business visitors contributing positively towards the local economy.http://www.mapsofworld.com/olympic-trivia/images/olympic-emblem/sydney2000.gifhttp://dvice.com/pics/sydney_stadium.jpg

Sydney 2000 Olympic Games Stadium

Sydney 2000 Olympic Games Logo

Moreover, Sydney had won 202 bids MICE by the end of 1999 and they included 251,280 delegates contributing AUS$919,649,010 to the Australian economy and thus increasing the level of its GDP. Also, sponsors use the Olympics to promote their brands thus improving their reputation while injecting money into the local economy. Most of the times the large amounts of money injected to the host country’s economy from foreign investment have impacts of millions of dollars and governments should use this money in the best way possible to benefit the economy. For example Visa spend over AUS$30million to include Sydney and pictures from the country into its advertisement campaign.

Of course there are huge costs involved in order for a country to host Olympic Games and sometimes countries plan ahead before even winning the bid to host such an event. The total investment in Australia represented 0.6% of its GDP, which was a large amount of money spent for a short-term event. Even though most expenses are covered by the government and domestic as well as foreign institutions, it is inevitable that taxpayer money would be needed in order to host a costly event like the Olympics and satisfying the standards required by the International Olympic Committee (IOC) (Matheson, 2006).Costs related to infrastructure, constructing stadiums and carrying out sports events are the biggest and although they are classified as costs some argue that they contribute positively towards the local economy such as by constructing stadiums jobs are created, lowering the unemployment levels, and stadiums can be used after the Olympics to host other sports or leisure events triggering some economic growth. In the case of Barcelona 1992 Olympics significant infrastructure improvements have taken place in just 8 years time, in order to be ready at the time of the event, whereas 50 years were normally needed for sea front, sewage, telecommunication improvements and new airport construction to take place. These changes have helped Barcelona to develop and look as a more attractive tourism destination. Also, in the case of Athens 2004 Games transportation improvements to roads, metro and trains helped towards making the city more contemporary (Kearney,2005). This aspect, infrastructure, add ups to the living standards of locals as well as making the city more accessible to future tourists since they will have the chance to use pleasing transportation methods. In Australia however, some venues had to go through maintenance in order to be able to host other types of events as well which required further costs than benefits to the Australian economy and also made the venues to loose from their original identity and history. An example of such an action is the Olympic Park 2000 which has been transformed in order to host sports events and several types of fairs. Similarly, the Olympic Stadium of Beijing 2008 Olympics has been transformed in order to be more profitable.

Ex-post studies have proven that there is not enough evidence that economic benefits arise from sports events to neither sports teams, nor facilities and according to Humphreys (2003, p.6) in US constructing new sports facilities failed to increase income per capita or total employment level (Owen, 2005). Even though a $5.1billion increase in NSW’s GDP resulted from the Olympics, where two fifths would go towards household income Sydney turned out to face expenses.

Added to these, the crowding out effect can be considered as a negative aspect of the Olympic Games that affects the local economy, including its GDP figures. The Australian government was worried that people and business would prefer other tourism and business locations and thus created the campaigns ‘Fun and Games’, ‘meet Australia’ and the ‘open for business’ campaign. Local people sometimes prefer to go away from their cities while events are taking place since they think that too much traffic is going to be present and it would be better for them to be away at that time thus lowering spending figures and injections of local people in the economy especially if they go on holidays to another destination. What is more is that, Olympic Games can attract more visitors to the event, like spectators of the games, people who want to explore the host country, and people who want to make business at the host city during that time but it can also prevent tourists from visiting the certain destination. This is due to the fact that a lot of people are going to be present at that period and they might prefer to visit if after the Olympic Games have finished, since they will have the chance to explore and enjoy more places when less people are going to be present. Sometimes these tourists never go to the country, making it loose money from the tourism industry. Additionally, hotel room prices during the Olympics tend to be higher than usual, with no major changes in their appearance and facilities that offer and reinforce the crowding out effect, this reducing spending coming from tourism, since usual customers tend to avoid visiting them during that time and reduce the net spending in the host city (Owen, 2005).

The process of planning and hosting the Olympics requires a high risk and local authorities should be careful since both short-run and long-run are important. Examples such as Montreal, which hosted the 1976 Summer Olympic Games and 30 years later the initial cost of US$1.5billion has not yet been recovered, show how adverse can mega events turn out to be for a country’s economy, since that debt has to be paid off and it cuts back from investment in other sectors of the economy, such as education, healthcare and creating new venues that would attract tourists, thus creating an opportunity cost. This debt in turn affects improvements that could be made, which affect negatively the tourism industry. Another example is Greece that was the host for 2004 Summer Olympic Games and is still facing a 6% budget deficit due to the games. Also, Greece is facing the problem that sports facilities cannot be permanently used and might have to shut down and lead to no benefits towards the local community (Kearney, 2005). Greece can be an example to future host countries to avoid constructing stadiums and facilities that will have no permanent use in the future as well as cannot recover their initial cost soon or even in the long-run and thus bring no financial benefits to the country.

An important outcome of money injected and continuously being circulating in economies is the multiplier effect, which estimates the impact of tourism on an economy through direct, indirect and induced spending but doesn’t show the income figures generated through tourism in each sector of the economy. It can create problems sometimes, since multipliers calculated using wrong methodology are of a too large scale. This arises mainly from the ignorance of opportunity costs and treatment of costs as benefits, as proven by ex-post studies mentioned before.

We have gone through the emerging impacts from mega events that affect a tourism destination but what will be the impacts on London 2012 Olympic Games which have not taken place yet? It must be noted that London is one of the most successful and established business centres and hosting the Olympics will bring even more business to operate in the UK economy.

Firstly, all the funding of the Olympic Games is done by both private and public organisations aiming the development of East London. The London Organising Committee of the Olympic Games and Paralympic Games (LOCOG) generates most of its £2billion budget from private sector and receives income from sales, commodities, sponsors and the IOC whereas the Olympic Delivery Authority (ODA) generates its income from the public sector. All the funding will be contributing positively towards building infrastructure and stadiums in the Olympic Park that can be used in the long-run for the UK community’s benefit. What is more, is that the Greater London Authority (GLA) works at its best attainable levels to bring benefits to the locals and gives £925million to the ODA.

http://www.sightseeingtours.co.uk/london-tourist-uk/london-images/london-olympics-2012.jpghttp://www.bbc.co.uk/london/content/images/2007/06/04/2012_logo_white_385x450.jpg

London 2012 Olympic Games Advertisement

Official London 2012 Olympic Games Logo

Furthermore, the London Development Agency (LDA), controls the sustainable economic growth and makes sure that locals will benefit as much as they can from the Olympics as well as it invests £250million towards covering the infrastructure costs and £220million towards cleaning the Park that is managed by the ODA. Another £2.2billion are generated by the National Lottery Funds that contribute towards the construction of the Olympic facilities, that add up to the country’s value and create strong legacies that people can benefit from even in the long-run. The entire infrastructure such as the energy centre, new roads, new bridges and the pumping station will be brand new and aim to cover the needs of the locals even in the long-run again.

Since the London Olympics follow a sustainable pattern they aim to construct venues that will be used post the games as well as trying to use existing venues to make a better use of them and if venues are not going to be used after the Olympics they will be made temporary so that no unnecessary costs will incur like in previous Olympics hosts like Barcelona and Greece. The Olympic Village will be turned into homes after the Games and even more houses will be built as well as shops, cafes, restaurants to provide more services to the locals and thus creating more jobs. London has another solution to the problem of under qualified workers since it will offer job training to the locals (London 2012, 2010).

To conclude, I have explained the economic impact of mega events on tourism using mainly the example of Sydney 2000 Games and showed that it is of high importance that governments should take the most beneficial strategies while hosting such events, having in mind not only the short-run but the long-run effects of their policies. Sydney 2000 Games can act as a benchmark, since they were the first hosts to take that particular approach and emphasise on business and economic benefits leaving behind them strong legacies even though not all investment was done wisely.

Also, the example of London shows that previous patterns are being corrected and followed and the legacy left behind investments in infrastructure can be judged upon their success. However, it is argued that no Olympics have shown enough evidence that there are important impacts such as increases in household impact (Owen, 2005). Moreover, it would be fair to mention that social, cultural, political and environmental impacts play a crucial role on a tourism destination since by showing to tourists the legacies and unique cultures that mega events create as well as caring about the environment while carrying out such event attracts other categories of tourists as well as it creates a better place for people to visit.

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