Is Tourism Harmful or Helpful? The Economic and Cultural Impact of Global Travel
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Welcome of money for the rest of us. This is a personal financial on money, how IT works, how to invest IT and how to live without worrying about IT. Ama host David stein today is episode four fit to six.

Its title is tourism harmful or helpful? The economic and cultural impact of global travel. I've been putting together a trip with the perl, my daughter and son in law.

We're going to ukon mexico. This is a gift for my daughter and son in law for graduating from university. We're heading to u katon.

My son law is a photographer, and he wanted to visit the town of campaign, a historical tickets, you, as a world heritage town, beautiful town. We've been there several times, and that's one of the places he wanted to go. And my daughter wanted to go explore the rainforest, particularly down near the ruins of college.

One of the places were going to stay is by the lead. This is a beautiful town in the amazing history. And I used to live there back in the middle es, and i've been back five or six times.

Typically, i've stayed at the hotel mission day Marks, which is right there in the center square across from the cathedral. But the last two times i've stayed by the lead i've rented through airbnb, I looked at rates for the hotel is on the markets they wanted, two hundred and fifty eight dollars a night for a room. Now, the nice hotel, the dinner is great in the, in the court yard there, but seemed a little Pricey.

So I booked an airbnb, two bedrooms, two bath, in a quiet area of town that I know, hundred and fifty dollars per night, including fees and taxes. Since twenty thirteen, i've stayed over ninety times using airbnb in over fifteen countries, have also stayed at hotels, probably more hotels than airbnb. S, we go back and for depending on how economic good is and convenient how larger party is, when the entire family will tend to rent their bAmber, there are times when times are more economical, such as during the pandemic, we date at four, five star hotels for the rates you would typically pay for a two or three star hotel.

This summer, hotels have been much more expensive, and L, B, N B has been more economical. In looking then at by the lead, there are eight hundred and thirty three places to stay in by the lead, renting a short term rental on air. B N B.

Is that a lot? I was trying to figure out, well, what's reasonable. There are just over fifty six thousand people that live in. By the lead, there's fifteen thousand housing units.

And in the ones to tis c, the one way that I saw to measure A, B, B density was how many airbnb units are there per thousand residents? And and looking at by the lead with eight hundred thirty three places to rent fifty six thousand people that that's around fifteen airbnb s per thousand residents. If we look at other areas, this is some data from statistic.

The most highly dense ed area for airbed bees was hawaii at twenty two point four. New orleans was was second at nineteen, and then Austin was about the same as by the lead at fifteen. And so there's a lot of their being bees and by the lead.

And I will be interesting to see how the town has changed since we last stayed there in twenty seventeen. When I looked to book A, B, B and twenty and fourteen, there were very few available. But there are some benefit of having so many airbnb s is that there are places and by the lead and unfamiliar with for put the road out to the small called a mine village.

Why us that there's old doc anas that have been restored, or other houses that have been restored to make into short term rentals in campaign that the beautiful colonial town, all the extra walls are painted of the buildings of assad. So that looks very well kept. But at least last time we were there, if you if you look in the windows, there are places that the facades there, but inside rubble.

And the benefit of airbnb is IT is provided capital really to be able to restore a lot of these houses. We booked at airbnb on this trip for camping. Ign, that is completely restored, colonial house. And so that is one potential benefit, but there can be too much air.

B, B, there was an article in new york times this week about a place called ocha town in oklahoma, population to teen, except on weekends, IT can get up to fifty thousand people visiting there prior to the pandemic. Coach town head around four hundred cabinet for rent on airbnb. Now there are more than twenty four hundred that the four hundred percent increase.

The town recently started collecting sales tax on these airbed rentals, and they expect to get a million dollars per month for a town of two hundred people, David Francis, who works with the oklahoman tacks commission, said. For a town of a few hundred people, this number is astronomical. The town is basically one giant airbnb.

Other towns have grappled with A B B in new york city recently, effectively banned short term rentals requiring rental owners to register their airbnb er other short term mental with the city minimum stay thirty days and air may be has to confirm that the unit is registered with the city before IT pays out any rental fees to the unit in new york city. Prior to this new regulation, there were over twenty two thousand short term rentals and one hundred twenty three thousand hotel rooms. The the density, if we look at that measure, the number of there bb per thousand inhabitants, new or cities, about five.

So not as dense somewhere like new irelands or hawaii. The number of listings on on airbnb from new york is plumaged about seventy seven percent since this new regulation. And and i've stayed in airbnb in new york city numerous times, although the last few trips hotels have have been more economical, probably because of this new regulation.

Air baby has added nearly a million active listings this year and gas ve stayed in ninety four thousand cities and towns that that's a record. There may be argues that this dispersion of tourism, two areas, whether or not hotels can have major economic benefits, the ability for individuals to to stay. For example, we're staying in a town called isp hill down in southern campaign SHE to go to the ruins of collect mall.

Theirs nowhere to stay. Really very, very few hotels that i've saw. So we rented an airbnb, which I thinks essentially like a private hotel in this case.

But we're seeing, at least according to airbnb is most recent report, that the supply of new rental homes is greater than the demand, that the supplies up nineteen percent, the demands up fourteen percent. Beyon hanson, who is a ad junk professor at new ork university, said a five percentage point different between supply and demand is significant. And you could see if that continues that the host will have to drop their Prices.

There will be recently changed their algorithm to favor the host that the guest of like the best, which actually makes IT much easier to search. It's like anything. There's a parallel. The most frequently state places with the highest ratings will be at the top of the search results, requiring those who don't have as higher rating than airbed conducting is the to have much lower Prices in order to to compete. Air DNA looks at the short term rental industry in their media outlook.

Surprisingly, they didn't see despite perhaps the supply demand and baLance the overall occupancy rate, they see only falling slightly to to round fifty seven point six percent from fifty nine point five percent in twenty and twenty two. They think they'll be fifty seven point six percent, twenty and twenty three. And so IT hasn't been a huge change.

The revenue per available room, which is a basic measure for the hospitality industry, they see that as one hundred and eighty five dollars versus one hundred and eighty seven last year, back in two thousand thousand and was one hundred and thirty three dollars. And so host that there bnb have been able to charge more. Now maybe the units are Better a bigger, we don't know.

Short term, vacation rental has become a huge business. It's another example of financialization, which is, as jailed esten describes in his book, it's the increasing role of financial motives, financial markets, financial actors and financial institutions in the Operation of domestic and international economies. Now how housing has always had a financial ization aspect to IT short term vacation rentals in private homes is just an extension of that, and it's becoming a bigger and bigger business.

We stayed at an airbnb in leads that I think the owner, the managing company, actually IT wasn't a really good experience at all. We had contact with six or seven different people over the period of a week, none of which were these posted host, the two host of the air in b. This is a big air ban b company with, I think over fifteen locations were actually seeing private equity firms and hedge funds want to and starting to buy out these rental houses.

T, P, G. Had fifteen or so or has in florida the private equity firm to do with short term tals. I anticipated some point. There will be an equity real state investment trust that focuses on short term rentals. There are already equity rates that focus on long term housing rentals, owning single family homes.

So if we think about is tourism, including the impact on housing, is is this a good thing, a bad thing, helpful or harmful? There's steady economic benefits to the towns, to the host of babbs. IT creates jobs, can generate revenue for local businesses.

IT can create tax revenue for a town to invest in infrastructure. I suspect that coach a town in oklahoma a two years or now will have much Better infrastructure than IT does now because IT has the revenue to support that. I was surprised though, given how rampant tourism is, that IT didn't make up as larger percent of economic output or GDP that I thought I was now.

Definitely some places, number one, global rank is macao, seventy four percent of GDP. This is for twenty nineteen. With tourism, a rubs, sixty two percent.

more. Dives, fifty six percent. So essentially islands, a lot of islands in cuba, an where there's not a whole lot of industry rather than tourism.

It's a much bigger percent. But then you have countries that we think of. This may be a tourist destination where it's higher, but not the biggest thing going on.

Thailand, for example, tourist is twelve cent of GDP. Now this is international tourism as opposed to domestic tourism. So we had include domestic IT will IT will be higher than that.

Greece is an eleven percent portugals at ten percent other european countries where we think of, as example, paris, I think, is the most popular city in the world for tourism overall GDP international tourism, two point six percent of Francis GDP, about the same as italy and netherlands. Us is at one percent of GDP for international tourism. So when from a GDP standpoint.

International tourism visitors to a given country that shows up basically as an as an export because the country is essentially exporting these experiences to international visitors. Now I would think that the ability to capture that would be a bit of a chAllenge. So there's probably a lot of overlapped messiness to this.

I saw some statistics in U. S. Where IT estimates total tourism and travel makes up around two to three percent. U. S. GDP in mexico is eight percent. There is an economic benefit, the tourism, there's a benefit as IT preserves the heritage and culture arts and crass the cultural festivals, many which can be attended by tourists.

IT can lead to greater conservation efforts because tourists want to visit places that remain attractive and and sustainable, and IT IT can lead to some community development and income for the community to find other projects. Marks are things that benefit the community, and not just the tourist. There are some places that survived because of tourism.

Some bread mention eleven worth. This is A A town in washington that the rare road passed by, and the the translators realized what we need to do something to sustain our town. And so they adopted a bavarian theme.

And now IT is sort of this traditional winter festivals people visit. And in a big part of the town is now tourism. Surprisingly, sand of phase, very similar.

You go to sanofi and IT, IT looks like these historic houses, but sana adopted adobe style house and very strict building codes back in the early twenty century, really as a wait to brand the town to bring in tourists and its worked phenomenally well in terms of tourism to to send effect to. There are many aspects of tourism Better, positive. There are, of course, negatives, the the environmental impact, pollution, litter, destruction of natural habitats, and that.

And that comes from over tourism, where too many people visit one place at a given time. And IT IT overwhelms the infrastructure, overwhelms the culture. There are places I have visited in kyoto, japan, where just the experience of going to one of the ancient sites, the shine, is there were so many tourists. IT just took away from the experience, can and solve some of that in in vietnam.

And he recently in chin quita in italy, in a place I think we're last there in twenty and thirteen, way more people now they they took a boat tour and and the capital in the boat, small boat, was just talking about how tourism, the traditional agriculture area of italy, is highly out the town as people everywhere. And he mentioned one town in the northern part of that area. The captain said they weren't smart enough to take advantage of the tourism, and so fewer people go there.

But then the captain said, on the other hand, it's still a very pleasant place because there are so few tourist and that's one of the the real chAllenges, and you can see this as you travel. Before we continue, let me pause and share some words from this week. sponsors.

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Net sweet dot. Come slash David. I saw one phone booth in london where there was a long q to get once picture taken in front of this phone booth because IT IT was sort of this instagram mean, where everyone one another other phone booth are in london.

But this one had a very long, long, so there can to be the concentration of tours. And I and there are parts in london that just were absolutely mopped. But there are other places, bed for park area where we stayed at an air B N B.

There's just just locals, the mother downsides to too much tourism is we can see cultural degradation that there's just too much that what made the place unique isn't like that anymore. Then, as in italy, first time I was there, I think, was in two thousand and four. And now I was mesmerized.

But even then, there was not as many locals as there used to be, and there are even fewer now, because IT becomes this tourist place, so IT can lose the authenticity that made IT attractive to to begin west world. Just buildings filled with tourists staying at their babbies and hotels. Some other chAllenges is if the country is a place is to reliant on tourism, there's some vulnerability there.

We saw that during the pandemic, places that were heavily reliant on tourism when the tourists weren't coming, then they were decimated economically. There can be big seasonality that can lead to times where it's very overrun. When we were staying in saying lives, one of our friends there, we just talked about how nice IT is when the summer months are gone.

And he says we can have our town back because there are fewer tourists in the off season, but that can lead to much more variability in terms of the total economy and some, some stresses if there's too much tourism during the summer season, but too few in other parts of of the season where IT makes the employment situation chAllenging because workers can only get employed part of the year. And then comes chAllenge for a local housing, etta. And there could be an in inequality aspect to IT as some households and businesses benefit from the tourism, where others, because housing Prices skyrocket because of the vacation ers that want to purchase second homes, the sheer number of vacation runs and and the local population gets Priced of the housing market and has to leave.

And that's part of losing the authenticity is the cultural aspect of a place. And if IT is that cultural aspect that's so important, it's those interactions. What I love about travel is the conversations i've had that people I ve met, the local flavor I recall being in a trip that bad night took in twenty sixteen.

The cuba IT was those conversations that I took away from. But there are also the places I remember sitting in the town square and tinted died cuba. And IT felt like they were tourists everywhere, just just sort of there.

I didn't like that in some ways, a bigger city like a london, or in this case, having a where the tourists were more spurred. Or maybe there was one area APP, but you could just cuss somewhere else. A few plugs away.

There were hardly any tours, but over tourism as a thing. Thinking about cuba, when we went in twenty sixteen, obama administration had just opened a window to to allow americans to visit. You had to have a special reason.

In our case we were we went a journalist because had a podcast. But I think it's a good microcosm of how tourism has both helped and in some cases, hurt cuba. In cuba, bay have been under an economic embargo, a trade embargo with the U.

S. Since before I was born, early sixties. The cubans have been suffering for that long.

Now make good health care, the educations, okay, but four hundred thousand cubans have LED the country just in the past two years. Out of eleven million inhabits a few episodes. O, we talked about signs of a collapse or severe economic hardship.

And one is people leaving a country they're choosing to leave. A good portion of that, in my mind, is certainly the the communist system in place, but also the trading barter. Now what's chAllenging to figure out, well, how much is the trading bargains vers just the inefficient y of how cuba has managed their economy, their leadership?

Back when we went in twenty sixteen, we stayed their bombs and we stayed at one airbnb that was hosted by Carlos and gennet. And they had ve been running out a portion of their home as a bed in breakfast for two years. They called coffee particulates s they had didn't come now.

But he said, but there's nothing to buy. We just like to buy a lamp. But because the trade in ebara, there's just there aren't lamps available or something of that sort.

And after the trump administration came, they closed the window. And so the ability of americans to tour cuba is even less than IT was. Now other countries can come, and cuba has opened up its economy.

A little more. People can rent bedrooms for short term rental for vacation ers. In some cases, they can have a private restaurant.

And now they can sell things. Basically a grad sell on the the weekends to sell whatever they want to small businesses microenvironment. And they need that to survive.

I saw one M P R interview where a gentleman, nam parada, said a leg of, or cost fourteen thousand PaaS just to submit, but even fifteen thousand pesos a month working at a state agency. And that's the chAllenge with the cuban economy. They have this private economy, primarily tourism driven, but all kinds of a sort of side hustles that bans have.

But the state economy is a disaster. And so salaries are super low that where people basically have the hustle in order to survive. In the same in pr interview, the individual says, you come and give me your shirt and i'll sell for twenty or thirty paces.

That's how we live. The other gentlemen was repairing. He fixes gas stoves.

And his little store, and he sells homemade clean products, crackers, drinks, flip flops all week long, even though it's illegal to do IT during the week only on of the weekend's. But he says, but I have to do IT. I have to do IT or we won't eat. There is a country where tourism basically is keeping people from starving because of the inadequate acy of the government, but also, I believe, because of the trade embargo with the U. S.

And I take very few political positions on this show, but but that's one I just I don't understand IT IT doesn't make sense to me after all these years, particularly when there are other communist countries that while there might be some trade restrictions such a with china, there is not an all out trade embargo where it's illegal for americans, households and businesses to transact with the country, except for some select humAnitarian exceptions. That doesn't make sense. But it's that tourism, that saving IT until there is a change.

But more than fifty years, there has been no change or enough change to give cubans even more freedom to build, to create, to sell their incredibly entrepreneur. Ultimately, though, when we think about tourism, it's more helpful than harmful. IT just needs to be dispersed more so we don't get these pockets where it's just over tourist.

Given climate concerns, I think it's Better to to bat travel to stay longer in one place. Not a totally disagreed ed travel because I think the cultural educational benefit the pathy created a received by traveling and interacting, it's worth IT. But IT needs to be done selectively in a way that hopefully IT can be done more sustainably.

But that the educational, the cultural change is critical, but like many things that needs to be kept within certain bounds, because then otherwise the benefit gets lost, the authenticity gets lost, the cultural exchange gets lost, and the economic benefits gets lost. That's episode for fifty six. Thanks for listening.

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