THE ECONOMIC GEOGRAPHY
OF THE TOURIST INDUSTRY BY
U.S. METROPOLITAN AREA:
Can Tourism Leverage the Creative
Class?
Keith Debbage and Omer Omer
Department of Geography
University of North Carolina at Greensboro
INTRODUCTION AND PURPOSE
• Why tourism? International tourism
generated $919 billion in export earnings
in 2010 (World Tourist Organization)
• Why metropolitan areas? Generated 86%
of US GDP in 2007
INTRODUCTION AND PURPOSE
• The overall purpose of this presentation is
two-fold:
• First, this paper analyzes how tourism
production from a supply-side perspective
(i.e., number of jobs and average wages by
tourism-related industry) varies by U.S.
metropolitan area
INTRODUCTION AND PURPOSE
• Tourism research is frequently premised
on a definition of tourist which is akin to
defining the health care industry by
defining a sick patient.
• By contrast, little tourism research has
defined tourism from a supply-side or
industry perspective utilizing NAICS
codes
INTRODUCTION AND PURPOSE
• A second purpose of this paper is to
disentangle the potential connections that
may or may not exist between the tourist
industry and Richard Florida’s creative
class, and the role tourism and creativity
may play in reshaping metropolitan
economies and stimulating innovation
LITERATURE REVIEW
• Why supply-side?
• Defining tourism from a supply-side will
address pressing questions such as what
are the dynamics of metropolitan tourism
labor markets and how are they connected
to overall measures of quality of life?
• Judd (2006) in Tourism Geographies recently
argued that tourism is too often defined as
a system of consumption (tourist) rather
than a system of production (tourism)
LITERATURE REVIEW
• Others have made similar arguments
including Britton 1991,Gee et.al 1997,
Roehl 1998, Smith 1998, Debbage and
Ioannides 2004
LITERATURE REVIEW
• Still others have explored whether tourism
can generate industry clusters (Porter
1998) and Marshallian industrial districts
grounded in agglomerative economics in
the way other industries do (Hjalager
2002; Jackson and Murphy 2002; Van
Hove 2002; Nordin 2003; Shaw and
Williams 2004; Novelli et.al 2006; Michael
et.al 2007; Miller et. al 2008; Bernini 2009)
LITERATURE REVIEW
• Why Creativity?
• Since the 1990’s, urban tourism has
emerged as a key tool in urban
redevelopment and a significant subject of
research regarding creativity and place
competitiveness (Richards 2001; Page
2003; Cartier and Lew 2005 ; Bayliss 2007;
Richards and Wilson 2007)
LITERATURE REVIEW
• BUT major problem with place-theming is
the serial reproduction of these strategies
resulting in an over-supply of projects
• The need for a greater differentiation has
stimulated a shift away from conventional
cultural industries toward more creative
tourism-related industries
LITERATURE REVIEW
• Richards and Wilson (2006) defined
creative tourism as a process that employs
high levels of creativity to innovate
distinctive products to meet specific
tourist needs
LITERATURE REVIEW
• Creative tourism also involves not just
spectating, nor just being there, BUT a
reflexive interaction on the part of tourists
with locals
LITERATURE REVIEW
• BUT very little of tourism literature has
incorporated Richard Florida’s creative
class theories even though Florida has
given the impression that travel and
hospitality products should be an integral
part of any effective economic
development strategy focused on
creativity (Novelli 2005)
LITERATURE REVIEW
• Florida has argued that a key growth
factor is the quality of human capital
(tolerance, diversity, talent) not the
business climate (low taxes, incentives) or
the other traditional factors of production
(land and capital)
• Diversity and the “style” of urban
facilities (e.g., cinemas, bars, museums, art
galleries, restaurants, and gift shops) play
a key role in this equation
LITERATURE REVIEW
• As a result of all this momentum, more
investments are being made in many
metropolitan areas to develop tourist
attractions as part of their overall
economic development package to attract
the “creative class” and “creative tourism”
LITERATURE REVIEW
• Less well understood is the role that the
tourism industry plays from a supply-side
perspective in cultivating overall
creativity, competitive advantage and
quality of life
METHODOLOGY
• Data is based on North American Industry
Classification System (NAICS) which
groups establishments into specific
industry categories based on comparable
production processes
• Little used in tourism studies with some
exceptions (Roehl 1998; Rosentraub and
Joo 2009)
METHODOLOGY
• NAICS defined tourism-related industries
include direct providers and supporting
services derived from Gee et al. (1997)
classification and Roehl (1998) listing
METHODOLOGY
• Direct providers include industries that
provide services that are directly
consumed by the tourist and are largely
dependent on tourism demand for their
existence
METHODOLOGY
• Direct providers included:
– Accommodation (NAICS 721)
– Air Transportation (481)
– Support Activities for Transportation (e.g.,
airport operations) (488)
– Transit and Ground Passenger Trans. (e.g.,
charter bus and taxis) (485/4853)
– Scenic and Sightseeing Transport (487)
METHODOLOGY
– Admin and Support Services (e.g., travel
agents and tour operators)(561/5615)
– Misc. Store Retailers (e.g., gift, novelty and
souvenir stores (453/4532)
METHODOLOGY
• Supporting tourism services are not solely
dependent on tourism demand for
existence given the demand for such
services from local residents
METHODOLOGY
• Supporting tourism services included:
– Museums, Historical Sites, and similar
institutions (e.g., zoo’s) (NAICS 712)
– Amusement, Gambling and Recreation
Industries (e.g., theme parks and casinos)
(713)
– Food Services and Drinking Places (722)
– Performing Arts, Spectator Sports and related
industries (711)
– Rental and Leasing Services (e.g., passenger
car rental) (532/53211)
METHODOLOGY
• Key Economic Indicators included:
– # of employees
– average annual pay
– # of establishments
• Data Source: U.S. Bureau of Labor
Statistics, 2006
METHODOLOGY
• Tourism/Resident Demand Ratios (U.S.
Bureau of Economic Analysis) included:
– Tourist Accommodation (721) – 80%
– Food Services and Drinking Places (722)
– 20%
METHODOLOGY
• Utilized the Standard Occupational
Classification (SOC) to aggregate the
creative class data based on Florida’s
methodology and it included:
–
–
–
–
Management Occupations (1100)
Business and Financial Operation (1300)
Computer and Mathematical (1500)
Architecture and Engineering (1700)
METHODOLOGY
–
–
–
–
–
–
Life, Physical, and Social Science (1900)
Legal (2300)
Education, Training and Library (2500)
Design and Media Occupations (2700)
Health Care Practitioners and Technical (2900)
Sales and Related Occupations (4100)
METHODOLOGY
• Key Economic Indicators included:
– # of employees
– median annual pay
– average annual pay
• Data Source: U.S. Bureau of Labor
Statistics, 2006
FINDINGS
• Tourism Employment by MSA, 2006
– Aggregate: 4.7 million jobs
– Direct Providers (hotels, airlines, TA, TO etc):
2.2 million
– Supporting Services (restaurants, museums,
theme parks etc): 2.5 million
Tourism Direct Provider Employment
Scenic and Sightseeing
Transportation (NAICS 487)
2%
Administration and Support
(TA and TO) (NAICS 561)
6%
Miscellaneous Store
Retailers (NAICS 453)
7%
Transit Transportation
(NAICS 485)
13%
Accommodation (NAICS
721)
46%
Support Activities for
Transportation (NAICS 488)
13%
Air Transportation (NAICS
481)
13%
Tourism Support Services Employment
Rental and Leasing Services
(NAICS 532)
2%
Museums and Historical
Parks (NAICS 712)
3%
Performing Arts and Sports
(NAICS 711)
11%
Food Services and Drinking
Places (NAICS 722)
49%
Amusements and Gambling
(NAICS 713)
35%
Tourism Employment Market Share
by MSA, 2006 (Median – 4.03%)
•
•
•
•
•
•
•
•
•
•
Atlantic City
Las Vegas
Pittsfield MA
Myrtle Beach
Ocean City, NJ
Flagstaff, AZ
Orlando, FL
Naples, FL
Honolulu, HI
Gulfport-Biloxi, MS
28.03%
21.69%
14.67%
14.36%
13.21%
12.22%
11.57%
10.30%
10.23%
10.13%
FINDINGS
• Pittsfield??? More on that later
FINDINGS
• Average overall tourism wages by MSA in
2006 were a low $28,057 suggesting
limited skill levels and training, part-time
labor and seasonality
FINDINGS
• Average tourism firm size by MSA is
small
– Tourism in total: 16 persons per firm
– Direct Providers: 17
– Supporting Services: 15
FINDINGS
• End result is many of these small “mom
and pop” operations are unlikely to be the
locus of substantive innovation and
creativity
Tourism Average Wages ($) by MSA,
2006 (Average - $ 28,057)
•
•
•
•
•
•
•
•
•
•
Los Angeles
New York
Chicago
Las Vegas
Nashville
San Francisco
Atlantic City
Anchorage
Naples
Indianapolis
$ 47,226
$ 37,655
$ 34,664
$ 33,409
$ 32,620
$ 32,477
$ 32,001
$ 31,826
$ 31,718
$ 31,239
FINDINGS
• Spearman’s Rank Correlation Coefficient =
0.51 at 1% Level Why?
– Increased specialization and agglomerative
effect
– Labor pool of transferable skills
• Good example is Las Vegas
– Second highest tourism job share (21.69%)
– Fourth highest average tourism wages
($33,409)
The Largest Hotels in the World, 2007
1
2
3
4
5
6
7
8
9
10
Hotel
Location
Rooms
First World Hotel
MGM Grand
Ambassador city Jomtlen
Luxor
Mandalay Bay
The Venetian
Excalibur
Bellagio
Circus Circus
Flamingo Las Vegas
Malaysia
Las Vegas
Thailand
Las Vegas
Las Vegas
Las Vegas
Las Vegas
Las Vegas
Las Vegas
Las Vegas
6,118
5,690
4,631
4,408
4,341
4,027
4,008
3,993
3,774
3,565
* Under construction is the Asia Asia Hotel in Dubai. It is scheduled
for completion in 2010, and is expected to have 6,500 rooms.
Source: InsiderVLV.com 2007
MGM GRAND HOTEL, LAS VEGAS
FINDINGS
• MGM Grand is second largest hotel in
world in 2007 with 5,690 rooms and over
$1billion investment
• Annual salaries at MGM Grand include:
– Executive chefs ($61,500)
– Multi-media artists ($61,410)
– Animators ($64,140)
Tourism Employment Market Shares (%)
Correlated with Overall Tourism Average Wages
($) by MSA, 2006
Variable
Spearman’s Correlation Coefficient
Significance Level
Direct Provider Employment Market
Share (%)
0.37
1%
Air Transportation Share (%) (NAICS
481)
0.46
1%
Accommodation Share (%) (NAICS
721)
0.08
Not Significant
Supporting Services Employment
Market Share (%)
-0.37
1%
Food and drinking places Share (%)
(NAICS 722)
-0.57
1%
Performing Arts and Sports Share (%)
(NAICS 711)
0.39
1%
FINDINGS
• BUT opportunity cost since other industry
clusters (engineering, high technology)
would likely generate more substantive
value added revenue
FINDINGS
• Additionally, tourism employment market
share is not correlated with overall
measures of affluence by MSA:
– per capita income (Spearman’s correlation
coefficient of 0.06)
– population growth (0.06)
– % population with college education (0.18)
FINDINGS
• BUT what about Richard Florida’s creative
class and the potential connections to the
tourist industry and cultural/creative
tourism
• Total Creative Class employment by MSA
in 2006 was 41.8 million with a median
pay of $35,130
• Creative class labor pool is nearly 10 times
bigger than tourism and pays more
Creative Class Employment Market
Share by MSA, 2006 (Median – 34.7%)
• San Jose
• Washington DC
• Boulder, CO
• Durham, NC
• Huntsville, AL
• Boston
• Charlottesville VA
• Trenton NJ
51.1%
50.1%
50.1%
49.1%
47.7%
46.5%
46.1%
45.5%
FINDINGS
• BUT does the geography of the creative
class systematically vary spatially with the
geography of tourism?
FINDINGS
• It does not seem so.
• Spearman’s Correlation Coefficient for
Percent Tourism Employment & Percent
Creative Class Employment by MSA was
0.04
FINDINGS
• But, a moderate associational relationship
existed between a subset of tourism (i.e.,
NAICS 711/2 performing arts, spectator
sports, museums and historic sites) and
creative class employment share
• Spearman Correlation Coefficient of 0.30
at 1% level
FINDINGS
FINDINGS
• Once again, Pittsfield MA features
prominently as it did in terms of %
tourism employment by MSA and it
appears to have cultivated linkages
between cultural tourism and creativity of
a sorts
CONCLUSION
Tourism can be a major employment
generator in certain MSAs particularly those
focused on gaming or warm weather beach
vacations
BUT, average wages are poor reflecting the
low skill levels in the industry
CONCLUSION
That said, as the percent employment in
tourism increases, the average wages tend to
increase in a similar fashion suggesting an
agglomerative effect of sorts
BUT tourism is not systematically connected
to other broader measures of quality of life
(PCI, population growth, %BA or higher)
CONCLUSION
Nor does the geography of tourism appear
systematically connected to the geography
of the creative class (despite the assertions
in the literature)
BUT the more cultural/creative
manifestations of tourism appear to be more
strongly linked to creative class labor pools
CONCLUSION
Additional research could include:
• Case studies of places like Pittsfield that
appear to be reinventing themselves by
explicitly linking cultural tourism to
creativity
• Developing a better working definition of
creative tourism
• More supply-side analysis!
THANK YOU