Tourism Is Eating the World
(Bloomberg Opinion) -- In 1953, mountaineers Tenzing Norgay and Edmund Hillary made the first confirmed summiting of Mount Everest, the world’s highest peak. Recently, Everest has grown so popular that photos are surfacing showing huge lines of climbers waiting to surmount that same peak. On rarefied ground where once only Norgay and Hillary tread, now climbers are dying because of overcrowding.
A less dramatic version of this scene is being played out around the world -- for both good and ill. The number of international tourist arrivals has been increasing more or less exponentially since the mid-20th century, and totaled about 1.4 billion in 2018. Europe has seen the biggest share, but the Asia-Pacific region is growing fast:
This growth has been driven by a confluence of factors. Most obviously, disposable incomes have grown around the world, with China’s gains being especially impressive in recent years. People are living longer and having fewer children, giving them the time and freedom to travel more. Areas that were once off-limits, now are accessible as the world has generally become a more peaceful and open since the end of the Cold War.
Technology has also played a key role. Air travel is cheap and ubiquitous. Tickets, hotels, tours and local transportation can now be booked online. The internet has also given the masses information about the world's tourist destinations, from Japanese hot springs to California wine country to Iceland's glaciers. Recently, Google Maps has made it much easier to find one’s way around a strange country, translation apps have made foreign-language communication less daunting, Uber offers easy transportation in many international cities and Airbnb has expanded the range of available accommodations.
Tourism is big business for the countries that manage to attract hordes of visitors. Direct receipts from tourism totaled $1.6 trillion in 2017, or 2% of the entire world economy:
The World Travel and Tourism council estimates that the amount of economic activity attributable to the sector is much larger, reaching $8.8 trillion in 2018, and supporting as much as 10% of all jobs on the planet.
But tourism has a down side as well. As the Everest example shows, travel to the most popular destinations is subject to what economists call congestion externalities -- when you go to a famous place, your presence makes the experience just a little less convenient and comfortable for everyone else. Multiply that effect by the millions, and the world’s tourists are crowding each other out of a good time. I felt this myself when I recently went to Golden Gai, a bar district that used to be one of Tokyo’s hidden gems, and found that it was packed with Western and Chinese tourists.
For cities, the experience can be even more harrowing. Even as tourist dollars flow into the coffers of local businesses, mobs of travelers strain infrastructure that was never built to handle so many human bodies. If a city tries to accommodate the inflow by building large amounts of new infrastructure, those streets and trains will sit empty during the off season, or if the city loses its tourist appeal. Travelers can be accommodated with Airbnb, but this can push up rents for locals. Logistically, it’s simply inefficient for every location in the world to always be prepared to house, feed and transport many more people than actually live there.
These problems are only going to get worse, as more countries in Asia, Africa and elsewhere join the ranks of developed countries. The new middle classes of India, Bangladesh and Indonesia are going to want their chance to see the Swiss Alps, the canals of Venice and the lights of Times Square.
Unfortunately, there will come a point where over-tourism makes travel both logistically inconvenient and much less enjoyable for everyone. The problem can be ameliorated by spreading tourists around to less crowded destinations, as Japan is trying to do. Some destinations, like Amsterdam, are cutting back on advertising and self-promotion. But eventually there will be no choice but to start charging tourists a fee.
A few places are already trying this. Venice will soon start charging people to come to the city for day trips. New Zealand has introduced a tourist tax. Various other European countries and cities have implemented or plan to implement taxes on hotels and other overnight accommodation. This is a simple application of congestion pricing, the textbook economics solution to the problem of overcrowding.
The inevitable rise of congestion pricing will be bad news for the emerging global middle class. It means that the dream of cheap globetrotting will never be for everyone -- at least, not if you want to go to famous places. Trips to premium destinations such as Venice will eventually become things only the well-off can afford. There will be more tourists than in the age before air travel and the internet, but tourism may never become as ubiquitous a middle-class luxury as sliced bread or automobiles.
The world is big, but it isn’t big enough to be everyone’s personal playground.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Noah Smith is a Bloomberg Opinion columnist. He was an assistant professor of finance at Stony Brook University, and he blogs at Noahpinion.
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