Tourists are taking over global cities

Crowded streets of Gothic Quarter on a sunny summer day, Barcelona, Spain

(Image credit: Alexander Spatari)

published 28 August 2024

Authorities have been imposing restrictions on tourists at overcrowded tourism sites worldwide, from tolls and quotas for those climbing Japan’s Mount Fuji to a new €5 pass for day trippers to Venice. Some cities and their residents have deliberately made themselves unwelcoming. Last year, Amsterdam ran online advertisements aimed at discouraging young British men from visiting, with warnings about potential fines and criminal records if stag dos get out of hand. Anger about “overtourism” has been especially acute in Spain, which has seen protests across major cities. Activists in Barcelona made global headlines in July when they fired water pistols at visitors.

Aren’t tourists an economic boon?

Yes, they are, says The Economist. They spend freely and typically make “little use” of local services. Globally, tourism employs as many people as the entire US population. The travel industry is poised to add $11.1 trillion to global GDP this year, and could hit $16 trillion within a decade, according to the World Travel & Tourism Council. Tourism has fostered recovery in southern European economies such as Greece and Portugal, which have been enjoying stronger growth than northern states of late. In emerging economies, tourism receipts can be used to finance infrastructure or other public investments that can help to grow the wider economy.

So what’s the problem?

The costs of mass tourism tend to be concentrated. Living in a tourist centre can be a miserable experience, with daily life plagued by crowds, constant photography and “tacky” souvenir stores. The “charming Austrian lakeside village of Hallstatt” provides one extreme example, says Kate Leahy for National Geographic. The village has only 800 residents but has been enduring coach loads of visitors, with numbers hitting 10,000 a day at peak times.

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One might argue that residents should be tolerant. Living in a place so beautiful that people are willing to travel thousands of miles to see it is a privilege, after all. But tourism also creates more serious problems. Tourists often exacerbate housing shortages. By one estimate, almost 30% of homes in central Florence are listed on Airbnb. And while tourism creates jobs, it doesn’t create many good jobs. Work in bars and restaurants is poorly paid and often seasonal, keeping workers from jobs where they could be more productive. Economies that become too reliant on tourism can find themselves stuck in the national equivalent of a dead-end job.

Why are there so many tourists?

The number of international tourists has risen almost 25-fold since the 1950s to 1.3 billion last year, says Zoe Williams in The Guardian. The rise of mass tourism is due to a confluence of factors, from global economic development to cheap online room rentals and a strong dollar. Anger in southern Europe partly reflects a lack of political control over the industry expanding. After the 2008 crash, “cash-hungry councils” were keen to promote tourism at all costs, says Jon Henley in The Observer. Above all, the travel boom has mirrored the ascent of low-cost airlines. The number of budget airline seats in Europe has risen 10% a year since 2010 and may pass 800 million this year.

How are cities responding?

Party destinations are becoming less tolerant of anti-social behaviour. The Balearic Islands have adopted new measures to crack down on binge drinking, with heavy fines for tourists who do things such as leaping from balconies into the hotel pool. Several Italian cities have brought in measures restricting new Airbnbs, while Barcelona will take the more radical step of banning all short-term rentals from the end of 2028. Last year, New York brought in very strict rules that choked off the supply of most short-term lets.

Are higher taxes a solution?

Many destinations charge nightly fees for hotels and holiday lets, but these often appear lower than they could be. Higher tourist taxes might dissuade those travelling to budget destinations, but many of the world’s most crowded and sought-after cities could clearly charge visitors more in order to restore the balance between residents and tourists.

In Barcelona, for example, the nightly tourist tax is set to rise in October, but still to only €4 per person per night. Venice is selling itself especially short. La Serenissima’s history and beauty should command pricing worthy of a luxury resort, but instead the city council has positioned it more like an Adriatic Butlin’s. Each year, 30 million visitors crowd the narrow medieval streets of a city with less than 50,000 inhabitants. Many visitors are day-trippers who buy little and pay no city taxes at all. This year, the local council tried to address the problem by charging day-trippers €5 for visiting on peak days, although the scheme is loss-making because of the costs of setting it up.

Has tourist tax worked?

This year’s pilot scheme has been branded a failure by activists, who claim that visitor numbers were actually higher on days when the charge was applied than on equivalent dates a year before. A €5 charge is hardly dissuasive, although the city plans to double it next year. Ticketing is also unpopular with many residents. While they get free passes, it is no fun being hassled by ticket checkers as you go around your own city. They would rather that Venice focused on cracking down on short-term lets and improving services for residents, which have been hollowed out as the resident population shrinks.

Amsterdam is one major European destination to pioneer a high tax approach. An accommodation levy of 12.5% means that an average €175 room attracts a charge of €21.80 per night, says Sonya Barlow for Lonely Planet. It remains to be seen whether tax grabs can reverse the relentless rise in numbers of visitors, but it might at least help the Dutch city go upmarket while providing the town hall with a lucrative cash cow.

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Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019.

Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere.

He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful.

Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.