How to make tourism work for locals and visitors alike

The dollar's strength is drawing a wave of American tourists, eager to utilize their increased purchasing power, much to the frustration of some Europeans and those who cherish serene, untouched beaches. This influx coincides with a resurgence in tourism, with travel increasing by 19% in the first quarter compared to the previous year and is expected to surpass pre-pandemic levels throughout the year.

However, this revival is encountering resistance. Popular destinations like Barcelona, Dubrovnik, Majorca, and Santorini are either implementing or considering restrictions on cruise ships. Japan is setting up barriers to manage crowds at Mount Fuji. In Barcelona and the Balearic Islands, tens of thousands have protested against "mass tourism."

The arguments behind these protests, and many of the resulting policies, are misguided. Tourism is a vital source of revenue, and policymakers can make it more manageable and profitable without resorting to bans or making destinations less appealing. A more market-driven approach could be more effective, leveraging pricing strategies.

Tourism is a significant industry, generating an estimated $3.3 trillion last year, representing 3% of global GDP and 6% of cross-border financial flows. For host countries, it provides crucial jobs and revenue. The unemployment rates that soared above 20% in much of southern Europe in the 2010s would have been even higher without the influx of tourists.

The issue, however, is that individual visitors don't consider the impact they have on others. Crowds create problems for both residents and tourists. Competing for rental flats, bus seats, and pavement space diminishes the quality of life for locals and the holiday experience for visitors.

Taxes can address this by ensuring tourists pay for the congestion they cause. In some places, taxes might deter crowds. Travelers seeking beautiful beaches have many choices. If Thailand increased its costs, tourists might opt for Vietnam instead. A study found that a 10% rise in tourist taxes in the Maldives results in a 5% decrease in visitor numbers.

In other locations, crowds might persist. Research shows that tourist taxes are largely ineffective at discouraging visits to unique attractions like Barcelona's Sagrada Família. Instead, people may adjust their spending, such as choosing cheaper accommodations, rather than canceling trips.

This isn't cause for concern. Significantly higher taxes could have a greater impact. Existing taxes are minimal. Barcelona's hotel tax will increase to €4 per night, and a day pass to enter Venice is just €5, which barely covers a coffee in St. Mark's Square. Prices could be much higher.

If tourists are willing to go elsewhere, less developed sites could attract more visitors. For those determined to visit popular spots, additional taxes from airlines or hotels could fund infrastructure improvements for tourists and residents. Other measures can also direct visitors to less crowded areas. Japan sometimes imposes a congestion charge on Mount Fuji, and Copenhagen offers ice cream to tourists who pick up litter. Proper pricing could give unhappy residents the option to relocate.

Some argue that tourist taxes are unfair, as they might prevent young or less affluent people from traveling. Yet, tourism is inherently unequal. Passes or tax exemptions could be given to students or unemployed individuals, as seen in many museums. Instead of lamenting the arrival of cruise passengers, Venetians should welcome the economic benefits they bring.