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Tourism Economics Meets Travel Reality

“Not everything that counts can be counted,
and not everything that can be counted counts.”
—attributed to Albert Einstein

Whenever World Tourism Day rolls around, as it did on Sept 27 (what, you missed it?), government officials like to boast about their increasing numbers of tourists. Crowd-weary tourists may just heave a sigh.

Indeed, when it comes to caring for the destinations we love to visit, or dream of visiting, we might wonder whether the people in charge of managing tourism are thinking clearly. Or are they instead relying on economists?

Okay, cheap shot. But some of the statistics that economists use to rank countries for “tourism competitiveness” might make you wonder. The following comparisons come from the Travel and Tourism Competitiveness Report 2017, a ranking of national economies. The TTCR is underwritten by the World Economic Forum, the same group that holds that annual meeting of CEOs and other financial heavyweights in Davos, Switzerland. According to the TTCR:

  • A country that strives to have the most paved roads and stadiums will attract you.
  • Hong Kong ranks much higher (49th) than Finland (76th) in natural resources.
  • Miniscule Luxembourg ranks 28th—more appealing than all of India (40th)
  • Struggling Moldova ranks 34th in health and hygiene, far better than the United States (56th)
  • Vietnam beats Switzerland for “Cultural Resources and Business Travel”

And, for that matter, why lump culture and business in the same category? Perhaps for economists, business is culture.

The Davos researchers have issued this Competitiveness report every other year since 2007. This year, Spain was first of 136 nations, Yemen last. (Countries with insufficient data are left out.)

Basically, “competitiveness” measures the extent to which “we’ve got a better product or service at a better value than the next guy.” But it’s a slippery concept when applied to countries and tourism.

It would be tempting to dismiss the TTCR’s numbers as trivia for econo-nerds, except that the report is intended to incentivize national leaders to make decisions that will improve their nation’s score. That means changing the character of the destinations.

When Bad Numbers Happen to Good Places

The TTCR researchers themselves are well aware of their report’s limitations. “It’s just a ranking. It’s not a bible,” cautioned researcher Tiffany Misrahi when she presented the report to a World Bank gathering earlier this year.

Very true, but policymakers are attracted to numbers like iron filings to a magnet. Most of them prefer to make multimillion dollar decisions based on such “hard” data. The Davos approach reassuringly depends on things you can count.

So what are the economists counting?

The report uses a system of 14 so-called pillars, each with a set of quantifiable indicators, including opinions of business leaders. Many of the indicators address what you would expect for an economic report—Business Environment (Pillar #1), Human Resources (Pillar #4), Air Transport Infrastructure (Pillar #10), and so forth.

Many indicators make sense, but some seem a bit wacko. “Road density,” for instance, rates tiny Malta as the most inviting country in the world road-wise, whereas Canada’s vast tracts of unpaved tundra drop its ranking to 105. Really? All those roadless arctic vistas hurt tourism?

Should Canada’s Yukon territory have more paved roads? Here, the Kluane region. Photo: Jonathan Tourtellot

Wisely, the report does include environmental sustainability (Pillar #9) as an essential component of the tourism economy. “Environmental sustainability is part of our economic bottom line as an industry,” Ms Misrahi told the World Bank gathering. “We are seeing that overall environmental and natural degradation continues, so it’s really an issue that must be addressed.” The report states bluntly: “… as the natural capital depletes, destinations lose revenue.”

American readers take note: The U.S. came in at 115 out of 136 in environmental sustainability. And those figures were pre-Trump.

Nature and Culture—A Miscount?

My main complaint is with the TTCR indicators for Pillars 13 and 14—“Natural Resources” and “Cultural Resources and Business Travel.” The total of a country’s natural and cultural World Heritage sites, for instance, make up a fifth of each pillar’s score. World Heritage is a wonderful program, but inscription of sites is a notoriously political and bureaucratic process. It was never intended to measure objectively a nation’s wealth of nature and culture.

Another fifth of the Culture score is based on “oral and intangible cultural heritage” as measured by UNESCO. Like many countries, the U.S. doesn’t participate in that program, so the home of jazz, blues, bourbon, square dances, pop art, Broadway, Cajun cooking, Hollywood, and countless indigenous traditions rates precisely “0” for that element of the score.

Most oddly, another fifth of the Culture ranking depends not on museums or theaters or native cuisine, but on number of large sports stadiums. The U.S. tops that ranking easily. That’s culture, by gum!

. . .the Culture ranking depends not on museums or theaters or native cuisine, but on number of large sports stadiums.

While noting objections, the researchers are reluctant to tinker further with the indicators, because that spoils the ability to track change over time. Understandable. But tracking a questionable measure is meaningless at best and dangerous at worst. Presumably national policymakers are smart enough not to pave their glaciers or deserts just to improve their scores. But spend lavishly for a prestige item like a stadium? Hmm.

Beware the Seductive Number

Among those who study mental frameworks—cognition—blind reliance on numerical data is called the Quantitative Fallacy. In short: That which is quantifiable is not necessarily significant, and that which is significant is not necessarily quantifiable. For policymakers it’s an easy trap to fall into, because it’s readily defensible: “Hey, numbers don’t lie!”

They don’t tell the whole truth, either. It’s as if we were to rank restaurants according to number of calories per serving—the higher the better. After all, adding butter and oil and fat and sugar makes for more “competitive” dishes, doesn’t it? The disastrous result, a morbidly obese clientele, doesn’t factor in. Economists call that an “externality,” outside the calculation.

The TTCR obviously contains a lot of useful information, but for a ranking of true destination sustainability and stewardship we need a largely different set of indicators, such as an updated approach to the destination stewardship ratings we published in National Geographic Traveler back in 2004-2010. A good stewardship ranking would include more sustainability data and more human opinions—from travelers, residents, and appropriate experts. In short, the whole squishy mélange of impressions, experiences, emotions, knowledge, and contradictions that leads us to care about a place.

And even then, we should take the numbers with a couple of tons of salt. The Quantitative Fallacy can have catastrophic consequences. That’s why it’s also known as the McNamara Fallacy, stemming from former U.S. Secretary of Defense Robert McNamara’s now-infamous practice of using body counts to claim American progress in the Vietnam war.

We know how that turned out.

Comments

  1. Ariane Janér
    Brazil
    October 16, 1:40 pm

    Jonathan, I agree with all your criticisms and would also like to point out others problems related to the size of the country. – larger countries are composed of several destinations, which can vary considerably in terms of competitiveness.
    – domestic tourism is not considered. If one sees the EU as a country, for instance, most of the tourism there would be domestic. In Brazil, domestic tourism far outweighs international tourism.

    On the other hand, I find the the TTCI useful as a base for further analysis and have all the reports since they first presented in Brazil years ago.The nice thing is that they have collected quite a lot of useful data for comparison between countries and over the years. With a bit of common sense you can then adapt to what really matters.

    I participated some years ago in an attempt to do an index for Adventure Travel, but found it was not very solid.

    Have had a look at the Global Sustainable Tourism Dashboard yet?

  2. Jonathon Day
    United States
    October 10, 11:44 pm

    Jonathan points out some important truths about the Destination Competitiveness Report. At one level, the Destination Competitiveness data provides an interesting base line of destination resources. Of course, while it identifies the resources it does not address how those resources are deployed. Based on this data – there are many destinations that are “fighting above their weight”: and other destinations that are under performing given their resources. Perhaps this discrepancy highlights the limitations of the approach. Of course – even that is hard to tell.

    The point of “Quantitative Fallacy” is well made. By creating a ranking of objective and subjective criteria – it makes some data seem more concrete that it really is.

    The big question is “so what” ? I can see some practical uses for the information…. You can imagine a scenario where tourism leaders fight for investment in roads because the Tourism Competitiveness Index say the country is lagging…. well maybe not.