Overtourism and how cities deal with it

Overtourism is a challenge for many locations. We have written several times about the increased easiness and the reduced cost of traveling which leads to more people traveling. As we have learned, in the years to come, more people especially from Africa and Middle East will start enjoying global traveling.

Overtourism and the shared economy are changing cities

Overtourism in combination with the shared economy are changing cities and locations in general. Property owners in travel locations prefer to rent out their houses for short term stays (mainly for tourists) than looking for local long term tenants. The world’s most profitable Airbnb owner, for example, is renting out 881 properties in London and generates revenues of 13.5 million EUR annually.

Another big Airbnb host is renting out 504 properties in Bali and generates revenues annually of 13.3 million EUR. This is almost 27,000 EUR per property per year and 2,200 EUR per month. Knowing that the minimum monthly income in Bali is set to roughly 100 EUR, those properties promoted via platforms like AirBnB are way out of reach for the local population.

Cities are loosing their local charme

This trend is common all over the world, properties are removed from the local rental market and made available for tourists coming from all over the world at a much higher price. A country like Spain, has its own challenges with it. The country was going through a massive economic crisis which started with the burst of the real estate bubble. In the past, home ownership was a normal thing for everyone supported through the massive financing of the banks. The local rental market was almost non-existing. During the crisis, a lot of people lost their homes and today buying a house becomes much more challenging. Thus, people who do not own property need to rent flats and houses. Since Spain is as well a tourism magnet, home owners prefer to rent out their properties to tourists due to the higher expected revenue. This drives the local communities outside of the cities. Commuting times become longer and small local shops which were servicing the local community are loosing their clients. In the end, whole neighborhoods are loosing their character. Small shops are replaced through international brands focusing on international travelers. These are all effects of overtourism. Other locations like Iceland or Venice are facing similar challenges with overtourism.

Turning overtourism from a thread into an opportunity

The other side of the coin is that due to the trend of travelers looking for more local experience, they are willing to go to areas and neighborhoods they would have avoided at all cost some years ago. Cities like New York managed to push visitors out of Manhattan into Brooklyn and Queens.

Overtourism cannot be stopped. Travel is becoming easier and cheaper and more available to more people. Thus, more people will travel. The earlier cities or countries acknowledge the fact that they can’t fight overtourism (neither can they fight the shared economy) and start looking at it as an opportunity, the earlier they will benefit from it. Overtourism channeled correctly will allow cities to develop under-developed neighborhoods. Hotel owners will consider locations they have not considered before.

Over hundreds of years, countries were faced the challenge of migration from rural areas into cities due to the lack of work and income generating opportunities. Maybe overtourism combined with modern technologies is the key to turn this trend around?

2017-12-30T10:09:09+00:00December 23rd, 2017|Blog|0 Comments

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