Rethinking tourism - focusing on impact and measuring what truly matters.
- Richard Hammond
- 5 days ago
- 6 min read
By Richard Hammond
Tourism is a huge wealth creator. We're all familiar with the stats: it's responsible for over 350 million jobs and about 10% of global GDP, plus it creates a significant incentive for protecting cultural heritage and funding conservation of biodiversity. Yet one of the industry's elephants in the room is that there is a huge disconnect between the amount of money that stays in local economies compared with what ‘leaks’ away from the destination to foreign-owned companies.
Speaking at the annual Adventure Travel Networking Conference last month, Alex Narracott, founder of Much Better Adventures, said that various studies put the figure for this leakage at somewhere between 50 and 80 percent of customer spend. Such whopping financial disparity can be compounded by the exclusivity that tourism brings to destinations; an article on the BBC website by Lebawit Lily Girma, for example, reports that less than 1% of the Jamaica’s coastline is now accessible to residents.
Alex said leakage is typically most extreme in the cruise sector and at all-inclusive resorts, and while the adventure travel sector is usually at the other end of the scale, he pointed out, “it's a problem across the whole industry”, leaving many communities "dealing with the pressure and the negative impacts of tourism without benefiting from the positive benefits of it". He says this raises the question, “is this positive local impact or is it actually just another form of wealth extraction?”
In the panel session Rethinking tourism - focusing on impact and measuring what truly matters, Alex presented a new AI-powered pilot created by Much Better Adventures in collaboration with Australian tech company Equator, which measures local economic impact and leakage at a trip level. He thinks it could be a game-changer for the industry because although the adventure travel industry is well-used to talking about creating jobs in rural communities, using locally owned accommodations, guide, local foods, and funding national parks, he said it’s historically been very difficult to prove any of these benefits.
“We've got anecdotes but not evidence”, he said.
“If I asked you how much of your revenue is actually staying in the local destination? How many jobs does your itinerary directly and indirectly create? How does your impact compare to a cruise operator or a package holiday? How does your itinerary design decisions affect those outcomes? No one can answer those questions… there's a real lack of hard empirical evidence”.
Furthermore, Alex said that there is increasing demand for operators to back up their claims about bringing positive economic impact to destinations. “We've got increasingly sceptical consumers who are pretty sure we're all greenwashing”, he said. “We've got the threat of environmental regulation ever growing. We've got certification standards that are tougher and tougher and are going to continue getting tougher and tougher – and for good reason. And up to now, proving it has been out of reach.”
Alex’s presentation on his new AI-powered pilot explained how it could provide the necessary information to change this. It works by simply accessing a URL of a trip itinerary, "taking unstructured text data and turning it into deeply structured information covering all aspects of the trip", including the routes, the breaks in the itinerary, the contributions to protected areas, the accommodation, and transport. “It breaks all that down”, he said, “to calculate ultimately what truly becomes real income in that destination and how much that income then multiplies through the community and into a true economic impact picture”.
Thomas Armitt, Planeterra; Alex Narracott, Much Better Adventures; and Kasia Morgan, Exodus
Working with Equator, MBA has calculated this for its trips and now has a live dashboard for all its tours based on an extrapolation of economic leakage rates by day, by trip, and by country. Alex said that as a result they found that 75p in every pound it sends to suppliers stays in the destination economy and with the multiplier effect of that means that £1 turns into £2.63.
Cruise and package tourism sector, “with publicly available numbers and studies that have been done", Alex said, "have retention rates of customer spend between 5 and 20 percent. We're at 75 percent”. Alex said this could have huge implications at policy level: “Destinations need to be thinking about which forms of tourism to invest in based on the forms of tourism that are going to be the most valuable for their communities”.
So why hasn’t this measurement of local economic impact been done before? The challenge, Alex explained, is that it would only have been possible to collect this kind of data by contacting hundreds, possibly thousands, of local partners and undergo what would be a massively complex economic modelling task. Alex pointed out that some organisations have done some great work on this, including the work of GAdventures’ Ripple Score, which for 20 years has measured the percentage of supplier spend that goes directly to locally owned businesses. The tour operator Pura Aventura’s Travel Positive methodology also measures positive impact across five key pillars ranging from supporting biodiversity to enhancing cultural exchange.
Following Alex’s presentation, there was a short panel session with Kasia Morgan, Head of Sustainability, Exodus Adventure Travels and Thomas Armitt, Senior Manager, Climate and Biodiversity, Planeterra who discussed the challenges of measuring local economic impact.
ATN connects a community that shares ideas, explores opportunities and supports one another
“The closest we've got to date is annually deriving the data on how many nights that we sell are spent in local accommodation, how many meals on our trips are eaten in local restaurants”, said Kasia. “And that gives, as you can imagine, just a very top line indication of support of our trips for local accommodation”.
However, Kasia, says that Exodus is working to delve deeper into the nitty gritty of social impact measurement “to really start to understand some of the economic impact of our trips and adventure travel more broadly”. It is currently collaborating with Exodus’s partners in the Baltics and in Jordan: phase one is the Who – learning who is benefitting from their trips and also which communities are represented or disadvantaged, while phase two is the How – learning how the economic impact of tourism benefits local communities for instance in terms of levels of minimum pay and women in employment.
Thomas Armitt then provided delegates with an insight into the resource intensiveness of being able to collect data accurately to be able to find out what the impacts are of tourism on communities. “It can't be understated”, he said. “Every year, we do an annual impact survey with our community partners. And it takes the best part of two months for our field teams to accurately collect the data… It takes time, resources, and trust.”
Thomas welcomed the work that MBA and Equator have done on using AI to assess local economic impact, “because it mainstreams the ability of tour operators to be able to take the plunge and calculate the economic impacts and really get used to it. I think it's a great gateway opportunity to be able to make this an important part of the business”.
From Planeterra's point of view, he said the tool “will be really useful for us to be able to prioritise those areas that we could be looking at more deeply.”
Connecting the adventure travel sector through collaboration, humour and insight
He also thinks that it could be applied to all different parts of the industry, not just the adventure travel sector, and agreed with Alex that it will become increasingly relevant: “I think it's actually essential that it does, especially if we look at regulation increasing, especially in Europe, also the awareness of consumers across the board… this kind of information, this kind of data and the analysis of it is going to be super important for the industry moving forward”.
Alex ended his presentation with a clarion call for the industry:
“If we can get momentum around the idea of economic impact measurement becoming standard practice in tourism as we started to do with carbon labelling over the last five years… the improvement across the industry would be rapid and significant.”
“And that means then destinations, communities, the nature reserves that we serve can start to become the beneficiaries of tourism again”.
JOIN THE WEBINAR!
Alex will be hosting a webinar in April to discuss this in more detail.
If you would like to join the webinar please email Alex to register your interest.
-ENDS-
About the Author
Richard Hammond - Green Traveller Media, Publishing Director and ATN Moderator
Richard's media production agency Green Traveller specialises in producing content with purpose for the visitor economy (greentraveller.com).
An accomplished videographer, Richard has filmed for adventure tour operators, tourist boards, and international organisations, is Editor of The Green Traveller magazine, and co-hosts It’s a Journey - a
sustainable travel podcast for the industry.
Richard has moderated ATN panel sessions for four years, leading discussions on key topics shaping our sector, including sustainability, responsible tourism and industry innovation.
Comments