The impact (and impasse) of tourism on the Italian economy
August 18, 2017
A passage from the book Il turismo fra diritto internazionale, europeo e italiano (Tourism in international, European and Italian law), edited by Carmela Decaro and Giovanni Piccirilli, out soon for LUISS University Press.
Italy famously owns an immense historical, artistic and cultural heritage, placing our country at the top of numerous international rankings. The extraordinary potential of this territory’s diversity along with its natural and environmental beauty are very well known, so much so that they propel the Italian tourism industry in contributing to an important part of the nation’s GDP, estimated between 10% and 12%.
Nonetheless, the aforementioned sector has been facing serious difficulties for years. Numerous international indicators testify to this slowdown – an actual downturn, even, especially in relation to other countries – which affects such a strategic segment of the national economy.
This past decade’s framework, therefore preceding the effects of the international economic crisis, already showed clues that are beyond worrisome. Long-term studies such as the Bank of Italy’s (2013), based on data from the World Trade Organization, show that between 1982 and 2010 Italy lost almost half of its tourist market share worldwide, down from 7.9% to 4.1%. Likewise, the International Monetary Fund recorded the loss of competitiveness of the Italian tourism sector in terms of market shares, number of visitors and average tourist spending compared to the same indicators recorded in other countries of the Mediterranean area. Again, in the same timespan, in-depth investigations revealed critical factors such as a great fragmentation and the atavistic tendency to dwarf economic initiatives in the industry: already at the time, these elements did not bode well for positive development prospects.
The reasons behind this decline seem to lie not only in the parallel rise of market tourism in emerging markets, chiefly China and Turkey. The latter, of course, is to be considered before the series of attacks and the coup d’état in 2016 brought in a highest degree of uncertainty with the suppression of democratic freedoms, until the state of emergency was proclaimed in the month of July, 2016 – still continuing as of May of 2017. What has changed is, first and foremost, the ways in which tourism services are enjoyed by foreign travelers in Italy. The average duration of international direct travels to Italy has decreased from 5.1 days in 1997 to 4.3 days in 2011, only partially compensated by an increase of 1.1% in the average per capita daily expenditure (from €85.6 to €94.4). Specifically, although it has long resisted the slowdown of international arrivals that have defined the other sectors (particularly the beach tourism division), sojourns in art cities are beginning to show signs of suffering and, above all, the inability to escape from the “forced” route Venice-Florence-Rome, which captures about 80% of the flows it’s more and more explicit. Among other things, this completely cuts off the South of Italy.
More generally, the causes of Italy’s gradual loss of competitiveness in the tourism field, according to the analysis by the International Monetary Fund, are essentially structural, ranging from a lack of attraction towards foreign investments to those not at all insignificant restrictions when it comes to foreign ownership, not forgetting the low level of professionalism of this industry’s workers. There are also references to infrastructural inadequacy (in particular regarding the rail network and port facilities), mentioning finally the lack of a specific government policies for the boosting of tourism as a priority in the national economy.
Internally too, a study by the Istituto Nazionale delle Ricerche turistiche (National Institute for Tourist Research) in October 2009 confirmed that the main factors that could adversely affect tourism in Italy were, among other things, the inadequacy of the information system and regarding services to the tourist, a negative assessment on the value for money ratio and a lack of tourist infrastructure. Finally, regulatory and bureaucratic obstacles serve as additional factors having a negative impact on the tourism sector in relation to the ability of Italy’s national legislation to attract businesses.
However, there may be some major signs of improvement: a survey of the Italian position in the World Bank’s annual Doing Business report has seen the country grow from a 78th place in 2010 (the last among OECD countries) to a 45th in 2016, which goes to show the positive outcome of the extensive reform efforts made over the last five years.
More specifically in the tourism sector, it must be noted a significant improvement in Italy’s standing in the Travel & Tourism Competitiveness Report as issued by the World Economic Forum, which in 2009 included Italy only at its 28th place (out of a total of 133 countries) in the tourism-related rankings, that is to say in a much worse position than direct competitors such as France, Spain and Greece, but also surpassed by countries such as Estonia or Luxembourg. And yet, in the most recent period, Italy has settled at the 8th place in the same report for the year 2017 (with the total number of countries updated to 136).