Rethinking the Economic Contribution of Tourism

Abstract

The article introduces an integrated market-segmentation and tourism yield estimation framework for inbound tourism. Conventional approaches to yield estimation based on country of origin segmentation and total expenditure comparisons do not provide sufficient detail, especially for mature destinations dominated by large single-country source markets. By employing different segmentation approaches along with Tourism Satellite Accounts and various yield estimates, this article estimates direct economic contribution for subsegments of the UK market on the Mediterranean island of Cyprus. Overall expenditure across segments varies greatly, as do the spending ratios in different categories. In the case of Cyprus, the most potential for improving economic contribution currently lies in increasing spending on “food and beverages” and “culture and recreation.” Mass tourism therefore appears to offer the best return per monetary unit spent. Conducting similar studies in other destinations could identify priority spending sectors and enable different segments to be targeted appropriately.