TOURISM AND REGIONAL DEVELOPMENT IN THE AGEAN REGION OF TURKEY
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1 TOURISM AND REGIONAL DEVELOPMENT IN THE AGEAN REGION OF TURKEY Prof. Dr. Sedef Akgüngör Dokuz Eylül University, Faculty of Business Assoc. Prof. Yeşim Kuştepeli Dokuz Eylül University, Faculty of Business Assoc. Prof. Yaprak Gülcan Dokuz Eylül University, Faculty of Business Abstract Tourism sector has become a mass industry in the last two decades in Turkey and is considered to be a significant sector for regional development particularly in the coastal areas of the south-western and western regions (Seckelmann, 2002). Thus, the tourism sector is a highpoint industry and a crucial public policy area for the Mediterranean and Aegean Regions. A long term national policy is necessary for sustainable public and private investment on tourism sector and thus on the regional development initiatives. The aim of the study is to investigate the potential of successful and sustainable contribution of the tourism sector for regional development in the Aegean Region of Turkey. In particular, the study aims to: 1) explore the differences in Aegean region s cities (eight NUTS3 regions) with respect to differences in the importance of the tourism sector and 2) investigate the impact of transportation infrastructure and investment initiatives on the growth of the Aegean region s tourism sector. The analysis aims to compare the NUTS3 regions from the perspective of the potential of the tourism industry for regional development in order to identify current challenges and opportunities for sound public policies. The employment data as well as investments are used on tourism and transportation in NUTS3 regions for the period of The analysis intended to 1) calculate the location quotients for the tourism industry for each NUTS3 region in the Aegean region and 2) use an econometric model to understand the impact of investments on transportation and tourism on the growth of the tourism industry in the region.
2 1. INTRODUCTION Tourism industry is one of the greatest sources of economic growth and job creation. Tourism sector generates jobs not only in its own sector but also via indirect and induced effects in connected sectors such as financial services, retailing, and telecommunications. Tourism has a positive influence on regional employment and income, but the magnitude of regional multiplier will vary according to the characteristics of each individual region. As tourism and regional development are closely linked, regions and local authorities play a key role in the formulation of policy and the organization and development of tourism and thus coordination between local authorities increases the benefits of policies such as large scale infrastructure projects (Constantin, 2000). Tourism sector s potential for economic development is vastly dependent on improvements to transportation infrastructure. Although investment in transportation infrastructure is treated as a necessary but not sufficient condition for economic development, inadequate transportation conditions don t support economic development (US Department of Transportation, 2003). Transportation infrastructure needs improvement in order to provide both efficient linkages to the regional system and internal connectivity. Rather than starting with a set of pre-defined transportation improvements and estimating the associated economic benefits, the planning can begin with first examining the region's economic development strategy, and then determining the transportation investments that would be needed to support this strategy. This approach is demonstrated in the following exhibit: 2
3 Source: US Department of Transportation, Public policies based on privatization, liberalization, deregulation, and decentralization, etc. provide incentives for efficiency and growth. The anticipated growth of the economy is expected to exert more pressure on infrastructure support facilities. In terms of transportation infrastructure, private sector should promote its participation in transport development. Local government unit should enhance its action in administering, implementing, and developing infrastructure facilities (Ministerial Conference on Infrastructure, 1996). Tourism sector has become a mass industry in the last two decades in Turkey and is considered to be a significant sector for regional development particularly in the coastal areas of the south-western and western regions (Seckelmann, 2002). Thus, the tourism sector is a highpoint industry and a crucial public policy area for the Mediterranean and Aegean Regions. A long term national policy is necessary for sustainable public and private investment on tourism sector and thus on the regional development initiatives. The aim of the study is to investigate the potential of successful and sustainable contribution of the tourism sector for regional development in the Aegean Region of Turkey. In particular, the study aims to: 1) explore the differences in Aegean region s cities (eight NUTS3 regions) with respect to differences in the importance of the tourism 3
4 sector and 2) investigate the impact of transportation infrastructure and investment initiatives on the growth of the Aegean region s tourism sector. The analysis aims to compare the NUTS3 regions from the perspective of the potential of the tourism industry for regional development in order to identify current challenges and opportunities for sound public policies. The employment data as well as investments are used on tourism and transportation on in NUTS3 regions for the period of The analysis intended to 1) calculate the location quotients 1 for the tourism industry for each NUTS3 region in the Aegean region and 2) use an econometric model to understand the impact of investments on transportation and tourism on the growth of the tourism industry in the region. 1 The Location Quotient is a tool to show whether the regions is specialized in a particular industry thus revealing the city s opportunities in tourism sector calling for public policy. 4
5 2. TOURISM IN THE AGEAN REGION Tourism in the Aegean Region is vastly based on sea tourism due to the coasts and thermal tourism. For Afyon, thermal tourism is dominant (Gazlıköy, Hüdai, Heybeli, Ömer-Göcek Thermals). Afyon has the advantage of being in the centre of the transportation net connecting the metropolitian cities to the coastal cities. In Aydın, Didim and Kuşadası are crucial points for sea tourism, In addition to Germencik, İmamköy and Davutlar Thermals. Thermal tourism is the most important tourism in Denizli. Most importantly, Pamukkale travertine which is a natural beauty is in Denizli. There are also several (Yeşilkaya, Çivril, Buldan, Goncalı, Sarayköy, Akköy, Honaz, Çardak, Kale thermal springs in Denizli. For Manisa (Kurşunlu, Sart, Urganlı, Saraycık, Hisar, Menteşe Thermals and Sakız Watering Place), Kütahya (Ilıca, Hisarcık-Sefaköy, Hisarcık-Hamamköy and Emet- Yeniceköy thermals) and Uşak (Hamamboğaz, Banaz, Örencik, Aksaz and Emirfakılı Thermals) thermal tourism has a higher share. İzmir located at the far west part of Turkey is famous for sea tourism. Some of the famous spots are Selçuk-Pamucak, Urla, Gülbahçe, Çeşme-Ilıca, Altınkum, Gümüldür, Özdere, Dikili, Çandarlı, and Foça. Muğla also with long coastal lines is very popular in sea tourism. Bodrum, Dalaman, Datça, Fethiye, Ölüdeniz, Köyceğiz, Marmaris, Dalyan, and Gökova are attractive places for internal and external tourists. In order to explore the differences in Aegean region s cities (eight NUTS3 regions) with respect to differences in the importance of the tourism sector, which is the first aim of this paper, we have analyzed hotels and restaurants in these eight provinces in detail. Table 1 shows some numerical observations regarding the hotels in the Aegean Region provinces. It can be seen that, Muğla has the highest share in Aegean Region s total number of employees, in Agean Region s total tourism output and in Agean Region s total tourism value added. For these three shares, Aydın and İzmir respectively follows Muğla. Table 1. Hotels in Agean Region I ( ) 5
6 Share in Agean Share in Agean Share in Agean Share Region s Total Region s Total Region s Total Tourism Province s Number of Tourism Output Value Added GDP Employees Aydın 22,88 28,25 34,73 1,44 in Afyon 5,24 3,19 4,06 0,53 Denizli 4,5 3,18 3,00 1,24 İzmir 22,82 18,55 20,46 7,21 Kütahya 0,43 0,18 0,17 0,80 Manisa 0,43 0,31 0,24 2,17 Muğla 43,41 36,24 37,25 1,47 Uşak 0,30 0,10 0,10 0,37 Table 2 shows the average number of hotels, beds, rooms and employees in hotels. Once again, Muğla is the leader for all of these and Aydın and İzmir respectively follows Muğla. Table 2. Hotels in Agean Region II ( ) Average Number of Hotels Average Number of Beds Average Number of Rooms Average Number of Employees Aydın Afyon Denizli İzmir Kütahya * Manisa * Muğla
7 Uşak * *: Percentages changes in the number of hotels, beds, rooms and employees are given in Table 3. Strikingly, Afyon has the highest percentage changes in hotels. Number of hotels has changed by %129, number of beds by % 905, number of rooms by % 492 and number of employees by % 277. This can be attributed to the rapid development of thermal tourism in Afyon in the last decade. Table 3. Hotels in Agean Region III ( ) % Change in Average Number of Hotels % Change in Average Number of Beds % Change in Average Number of Rooms % Change in Average Number of Employees Aydın % 78 % 40 % 40 % 41 Afyon % 129 % 905 % 492 % 277 Denizli % 60 % 79 % 76 % 5 İzmir % 63 % 67 % 50 % 26 Kütahya * % % % % 6.73 Manisa * % 33 % 51 % 38 % 83 Muğla % 44 % 28 % 30 % 9 Uşak * % 25 % 28 % -1 % 37 *:
8 Figure 1. Location Quotient (Hotels) in the Aegean Region Provinces in 2000 Location Quotient (Hotels) ,0000 6,0000 5,0000 4,0000 3,0000 2,0000 1,0000 0,0000 Afyon Aydın Denizli İzmir Kütahya Manisa Muğla Uşak 8
9 Figure 2. Share of the Value Added (Hotels) of the Province in the Aegean Region in 2000 (Value Added of the Province / Population of the Province) / (Value Added of the Aegean Region / Population of the Region) (Hotels ) 5,0000 4,5000 4,0000 3,5000 3,0000 2,5000 2,0000 1,5000 1,0000 0,5000 0,0000 Afyon Aydın Denizli İzmir Kütahya Manisa Muğla Uşak 9
10 Figure 3. Share of the Value Added (Hotels) of the Province in Turkey in 2000 (Value Added of the Province / Population of the Province)/ (Value Added of Turkey / Population of Turkey) (Hotels) 9,0000 8,0000 7,0000 6,0000 5,0000 4,0000 3,0000 2,0000 1,0000 0,0000 Afyon Aydın Denizli İzmir Kütahya Manisa Muğla Uşak 10
11 The analysis of restaurants in the NUTS3 regions of the Aegean Region is given in Tables 4 and 5. Unfortunately, data is not available for Kütahya and Uşak for the restaurants; it is also limited for the other NUTS3 regions. With these limitations in mind, it can be seen from Table 4 that İzmir has the highest number of restaurants, tables and employees in restaurants. Table 4. Restaurants in Agean Region I Average Number of Restaurants Average Number of Tables Average Number of Employees Aydın Afyon Denizli İzmir Kütahya N.A. N.A. N.A. N.A. Manisa Muğla Uşak N.A. N.A. N.A. N.A. In Afyon and Manisa, the percentage change in number of hotels is % 33, highest in the Aegean Region. Aydın has the highest percentage change in number of tables (% 76) and employees (% 109). Table 5. Restaurants in Aegean Region II % Change in Average Number of Restaurants % Change in Average Number of Tables % Change in Average Number of Employees Aydın % 0 % 76 % 109 Afyon % 33 % 52 % -4 Denizli % 0 % -3 % 6 İzmir % 31 % 50 % 13 Kütahya N.A. N.A. N.A. N.A. 11
12 0,0000 Manisa % 33 % -12 % -33 Muğla % -9 % -1 % 41 Uşak N.A. N.A. N.A. N.A. Figure 4. Location Quotient (Restaurants) in the Aegean Region Provinces in 2000 Location Quotient (Restaurants) ,0000 3,5000 3,0000 2,5000 2,0000 1,5000 1,0000 0,5000 0,0000 Afyon Aydın Denizli İzmir Kütahya Manisa Muğla Uşak Figure 5. Share of the Value Added (Restaurants) of the Province in the Aegean Region in 2000 (Value Added of the Province / Population of the Province)/ (Value Added of the Aegean Region / Population of the Region) (Restaurants) 7,0000 6,0000 5,0000 4,0000 3,0000 2,0000 1,
13 Figure 6. Share of the Value Added (Restaurants) of the Province in Turkey in 2000 (Value Added of the Province / Population of the Province)/ (Value Added of Turkey / Population of Turkey) (Restaurants) 14, , ,0000 8,0000 6,0000 4,0000 2,0000 0,0000 Afyon Aydın Denizli İzmir Kütahya Manisa Muğla Uşak 13
14 3. THE RELATIONSHIP BETWEEN TRANSPORTATION INVESTMENTS AND REGIONAL DEVELOPMENT IN THE AGEAN REGION Infrastructure is considered to be a major determinant of the attractiveness of destination. Roads, water, electricity, safety services, health services, communication services are key determinants of international arrivals. Figure 7. Share of transportation investment in region s total investment % share or transportation investment in regions' total investment 90,0 80,0 70,0 60,0 50,0 40,0 30,0 20,0 10,0 0, Afyon Aydın Denizli İzmir Kütahya Manisa Muğla Uşak 14
15 Table 6. Transportation Infrastructure and Tourism Share of Transportation Investment in Total Investment % Change in Average Number of % Change in Average Number of Beds % Change in Average Number of Employees Hotels Aydın 1 % 78 % 40 % 41 Afyon 22 % 129 % 905 % 277 Denizli 17 % 60 % 79 % 5 İzmir 17 % 63 % 67 % 26 Kütahya * 10 % % % 6.73 Manisa * 7 % 33 % 51 % 83 Muğla 11 % 44 % 28 % 9 Uşak * 13 % 25 % 28 % 37 Correlation 0,42 0,62 0,45 *:
16 Panel Data Analysis Tourism Hotel VAH it = β 0 + β1ngdppc it + β 2 BED it + β 3 PINTO it + β 4 PINTC it + β 5 PINTR it (1) where VAH: value added hotel, NGDPPC : nominal GDP per capita, BED: number of beds, PINTO: public investment in tourism, PINTC: public investment in tourism and communication, PINTR: public investment in transportation. Table 7 shows the estimation results of equation (1) with random cross section effects. Table 7. Panel data estimation for hotels: Random cross section effects Method: Panel EGLS (Cross-section random effects) Sample: Total panel (balanced) observations: 56 Variable Coefficient Std. Error t-statistic Prob. C BED NGDPPC PINTO PINTC
17 PINTR Weighted Statistics R-squared Mean dependent var Adjusted R-squared S.D. dependent var S.E. of regression Sum squared resid 5.42E+16 F-statistic Durbin-Watson stat Prob(F-statistic) Table 8. Panel data estimation for hotels: Random cross section effects and random time effects Method: Panel EGLS (Two-way random effects) Sample: Total panel (balanced) observations: 56 Variable Coefficient Std. Error t-statistic Prob. C BED NGDPPC PINTO PINTC PINTR Weighted Statistics R-squared Mean dependent var Adjusted R-squared S.D. dependent var S.E. of regression Sum squared resid 5.42E+16 F-statistic Durbin-Watson stat
18 Prob(F-statistic) Tourism - Restaurant VAH it = β 0 + β1ngdppc it + β 2 TAB it + β 3 PINTO it + β 4 PINTC it + β 5 PINTR it (2) where VAH: value added hotel, NGDPPC : nominal GDP per capita, TAB: number of tabls, PINTO: public investment in tourism, PINTC: public investment in tourism and communication, PINTR: public investment in transportation Table 9. Panel data estimation for restaurants: Random cross section effects 18
19 Method: Panel EGLS (Cross-section random effects) Sample: Total panel (balanced) observations: 56 Variable Coefficient Std. Error t-statistic Prob. C TAB NGDPPC PINTO PINTC PINTR Weighted Statistics R-squared Mean dependent var Adjusted R-squared S.D. dependent var S.E. of regression Sum squared resid 3.06E+14 F-statistic Durbin-Watson stat Prob(F-statistic) Table 10. Panel data estimation for restaurants: Random cross section effects and random time effects Method: Panel EGLS (Two-way random effects) Sample:
20 Total panel (balanced) observations: 56 Variable Coefficient Std. Error t-statistic Prob. C TAB NGDPPC PINTO PINTC PINTR Weighted Statistics R-squared Mean dependent var Adjusted R-squared S.D. dependent var S.E. of regression Sum squared resid 2.93E+14 F-statistic Durbin-Watson stat Prob(F-statistic)
21 4. CONCLUDING REMARKS The research investigates the role of tourism on Agean Region s development.tourism itself has a significant role in the economics in the Agean Region. This role differs across provinces: Aydın and Muğla in hotels, İzmir and Muğla in restaurants. There is potential for growth with respect to hotels for Afyon and Denizli, whereas there is potential for growth with respect to restaurants for Afyon and partly Manisa, Muğla. Such potential is significantly correlated with the transportation investments in these regions (particularly Afyon and Denizli). The share of transportation investments in total investments is relatively larger in Afyon, Denizli, Mugla and İzmir. In order to investigate the role of infrastructural variables on the value added of the tourism sector, a panel data regression was run. The results indicate that tourism value added (hotels) is significantly and positively related with number of beds and nominal GDP per capita of the region. Tourism value added (restaurants) is significantly and positively related with number of tables, nominal GDP per capita of the region, public investment in tourism. The results in general show that the potential role of tourism in economic development of the region is significant. Transportation infrastructure in particular has a role in the growth of the tourism industry. Further development in tourism depends on; 1. public policies directed towards specific investments which is tailored according to the needs of the region on tourism, such as coastal regions may choose to specialize on small boutique hotels which provides high quality. On the other side, regions like Afyon and Denizli by being on the cross section to Anatolia and serving to domestic tourists may still prefer to invest in 5 star hotels which provides a standard service. 2. efforts to increase the number of hotels/ restaurants (beds /tables) in the region 3. significant efforts to increase per capita GDP through subsidies, tax deductions, etc. Increase in per capita GDP enhances the absorption capacity of the region not only for tourists but also for the local people. Local people learn to dine outside and be more tolerant to tourist coming from different cultures. By the same token wealthier people have an urge to travel and learn more about the rest of the world which in return brings creative ideas for the tourism sector. 21
22 In this paper, only highways is used as transporation infrastructure and results mostly signifies the role of the domestic tourists in regional growth in tourism sector. A further reserch that includes airlines and maritimes as transportation infrastructure and not only the amounts of investments but the physical units will needed to find sound results to recommend policies in the region. 22
23 REFERENCES Constantin, Daniella, (2000), Tourism and Environmentally Sustainable Regional Development: The Case of Romania 40 th Congress of the European Regional Science Association, 29 August-1 September 2000., and Constantin Mitrut, (2007), Strategies For Cultural Tourism, Sustainability And Regional Development. A Case Study in Romania, 47 th Congress of European Regional Science Association, Paris. Ministerial Conference on Infrastructure, (1996), Infrastructure and Tourism Development, Country Report t for the Philippines, October 1996, New Delhi. OECD Programme of Research on Road Transport and Intermodal Linkages, (2000), The Impact of Transport Infrastructure on Regional Development, Abstract ITRD Number: E Russo, Antonio, (2000), The Sustainable Cultural Cluster, Notes on agglomeration, tourism policy and information technologies in tourist cities, 40 th Congress of the European Regional Science Association, 29 August-1 September Seckelmann, Astrid, (2002), Domestic Tourism-a Chance for Regional Development in Turkey?, Tourism Management 23, Unutmaz, Hakan, (2000), The Definition of planning principles of Holiday Villages Built in Turkey, 40 th Congress of the European Regional Science Association, 29 August-1 September
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