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Advances in Spatial Science
The Regional Science Series

Series Editors
Manfred M. Fischer
Vienna University of Economics and Business, Wien, Austria

Jean-Claude Thill
University of North Carolina, Charlotte, NC, USA

Jouke van Dijk

University of Groningen, Groningen, The Netherlands

Hans Westlund
Jönköping University, Jönköping, Sweden

Advisory Editors
Geoffrey J. D. Hewings
University of Illinois, Urbana, IL, USA

Peter Nijkamp
Free University, Amsterdam, The Netherlands

Folke Snickars
Editorial Board, Heidelberg, Baden-Württemberg, Germany

This series contains scientific studies focusing on spatial phenomena,

utilising theoretical frameworks, analytical methods, and empirical
procedures specifically designed for spatial analysis. Advances in
Spatial Science brings together innovative spatial research utilising
concepts, perspectives, and methods relevant to both basic science and
policy making. The aim is to present advances in spatial science to an
informed readership in universities, research organisations, and policy-
making institutions throughout the world. The type of material
considered for publication in the series includes: Monographs of
theoretical and applied research in spatial science; state-of-the-art
volumes in areas of basic research; reports of innovative theories and
methods in spatial science; tightly edited reports from specially
organised research seminars.
The series and the volumes published in it are indexed by Scopus.
More information about this series at http://​www.​springer.​com/​
series/​3302
Editors
Mauro Ferrante, Oliver Fritz and Ö zge Ö ner

Regional Science Perspectives on

Tourism and Hospitality
1st ed. 2021
Editors
Mauro Ferrante
University of Palermo, Palermo, Italy

Oliver Fritz
WIFO—Austrian Institute of Economic Research, Wien, Austria

Ö zge Ö ner
University of Cambridge, Cambridge, UK

ISSN 1430-9602 e-ISSN 2197-9375

Advances in Spatial Science
ISBN 978-3-030-61273-3 e-ISBN 978-3-030-61274-0
https://doi.org/10.1007/978-3-030-61274-0

© Springer Nature Switzerland AG 2021

This work is subject to copyright. All rights are reserved by the

Publisher, whether the whole or part of the material is concerned,
specifically the rights of translation, reprinting, reuse of illustrations,
recitation, broadcasting, reproduction on microfilms or in any other
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electronic adaptation, computer software, or by similar or dissimilar
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service marks, etc. in this publication does not imply, even in the
absence of a specific statement, that such names are exempt from the
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The publisher, the authors and the editors are safe to assume that the
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at the date of publication. Neither the publisher nor the authors or the
editors give a warranty, expressed or implied, with respect to the
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This Springer imprint is published by the registered company Springer

Nature Switzerland AG
The registered company address is: Gewerbestrasse 11, 6330 Cham,
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This book is dedicated to our dear friend and mentor, “Il padrino” Prof.
Geoffrey J. D. Hewings, founder and erstwhile Director of the Regional
Economics Applications Laboratory at the University of Illinois, Urbana-
Champaign. Over many years, Geoff inspired numerous students and
scholars all around the world. Our debt to him is considerable: not only in
encouraging our devotion to the pursuit of knowledge but also in
inculcating a team spirit. Whilst spending parts of their academic lives at
REAL in different periods of time, the three Co-editors of this book have
been able to forge a friendship which has nurtured a long-lasting
collaborative effort: the dedication of a true mentor.
Foreword
Regional science (RS) has evolved and developed into a rigorous area
since the seminal study by Isard (1956) that is often cited as one of the
foundation stones upon the area was built. From a geographical
perspective, Tomaney (2020: 231) highlighted the changing features of
RS in the late 1960s and early 1970s, particularly in response to the
criticisms of the positivism tradition posed by behavioural scientists
(Johnston and Sidaway 2015). Vaz (2020) described these distinctive
features of RS arguing that ‘as a positivist approach, regional science
uses spatial analysis as a proxy to validate spatial findings’ (Vaz 2020:
359). Yet the unifying focus of RS—the region, is no longer just the
preserve of geographers and economists, despite the rich history of
scholarly endeavour since antiquity focused on regional description
and analysis (Johnston and Sidaway 2015). RS’ focus on the region has
a preoccupation with administrative boundaries and the use of data at
different spatial scales to address spatial problems in a regional setting
although we must also recognize that many boundaries are
exogenously determined and so the researcher has to work with the
data generated for this purpose. The analysis of spatial phenomena at
different scales within the region has implicitly meant ‘regional science
is positivist in its epistemological orientation, mathematical and
statistical in its methods, and displays a proclivity to model and
forecast data to better understand spatial interactions, locational
dynamics and regional processes and trends’ (Vaz 2020: 358). Despite
the shifts in the 1970s away from positivism in spatial research as a
dominant paradigm, the academy maintained an active commitment to
regional science scholarship in journals such as Papers in Regional
Science (which is the official journal of the Regional Science Association
International that published its first issue in 1955), Regional Studies,
the Journal of Regional Science and the Annals of Regional Science. A
number of newer journals have also been established illustrating the
continued academic health of the subject. But how has this tradition of
RS research impacted upon tourism and hospitality?
A sustained interest in RS within the broader domain of leisure and
tourism can be discovered from the 1970s onwards, with reference to
Tourism in the journal Regional Studies in the very early issues in the
late 1960s and early 1970s, for example. As a geographer, I have always
taken the RS perspective for granted in over 20 years of tracing the
evolution of the geography of tourism and recreation (Hall and Page
1999, 2014). When one looks at the seminal studies such as Coppock’s
(1977) edited collection—Tourism: A Tool for Regional Development, it
was an important milestone as were the early texts on tourism
geography (e.g. Pearce 1981; Mathieson and Wall 1982) which
demonstrated the rich tradition of regional spatial analysis of tourism
and recreation. These studies embraced the regional analytical
approach, using spatial data to depict tourism and leisure phenomena
and to derive generalisations from the findings. Indeed, this book
represents the ongoing trajectory of RS applications to tourism and
hospitality, which is evident in the top-rated tourism journals (e.g.
Tourism Management, Annals of Tourism Research and Journal of Travel
Research). New theoretical perspectives have also given the subject a
boost together with greater multidisciplinary team contributions
within a RS paradigm. In geography, this has been facilitated by the
growth of geographical information system (GIS) research since the
1970s, pioneered in tourism by Coppock and latterly with the growing
availability of GIS software making it more accessible to a wider
audience. Alongside, this has been the wider use of GIS in the public
and private sector, giving RS a renewed focus in planning to address
spatial problems. Vaz (2020) reviewed these new directions with the
emergence of Regional Science 2.0, facilitated by the rise of new
opportunities to integrate big data into research activities alongside
artificial intelligence (e.g. with the application of neural networks)
alongside the more conventional approaches of the geographer (e.g.
land use change, gravity models and spatial interactions) and
economist (e.g. input/output analysis, general equilibrium models and
stochastic modelling).
Many of the contributions in this book demonstrate that the
ongoing relevance of a RS paradigm to tourism and hospitality remains
a central strand of understanding the dynamics and effects of tourism
phenomena. Tourist travel occurs within a spatial context, and tourist
activities at a destination are typically regional in focus; therefore, their
interactions and impacts have a regionally contingent effect at various
spatial scales. Similarly, the wider visitor economy within which the
hospitality sector is located is associated with spatial fixity of supply
(i.e. it tends to be fixed at given points in time and space). The editors
have assembled a wide range of examples of the RS application to
tourism and hospitality in this volume that demonstrates the principles
and practice of regional analysis. The editors are to be congratulated on
demonstrating that RS is alive and well in the regional analysis of the
visitor economy. The field has come a long way since the contributions
of scholars in the 1950s, 1960s and 1970s. I am sure this book will
become a welcomed resource for the academy and continue the
advocacy role of RS in the analysis of tourism and hospitality
phenomena.

References
Coppock, J. T. (Ed.) (1977). Tourism: A tool for regional development,
tourism and recreation research unit. Leisure Studies Association:
University of Edinburgh.
Hall, C. M. & Page, S. J. (1999). The geography of tourism and
recreation: Environment, place and space. Routledge: London.
Hall, C. M. & Page, S. J. (2014). The geography of tourism and
recreation: Environment, place and space (4th ed.). Taylor & Francis:
Abingdon.
Isard, W. (1956). Location and space economy: A general theory
relating to industrial location, market areas, land use, trade, and urban
structure. MIT Press: Cambridge, MA.
Johnston, R. & Sidaway, J. D. (2015). Geography and geographers:
Anglo-American human geography since 1945. Taylor & Francis:
Abingdon.
Mathieson, A. & Wall, G. (1982). Tourism: Economic, physical, and
social impacts. Harlow: Longman Scientific & Technical.
Pearce, D. G. (1981). Tourist development. Harlow: Longman Scientific
& Technical.
Tomaney, J. (2020). Region. In A. Kobayashi (Ed.), International
encyclopedia of human geography (2nd ed., pp. 229–241). Oxford:
Elsevier.
Vaz, E. (2020). Regional science. In A. Kobayashi (Ed.), International
encyclopedia of human geography (2nd ed., pp. 357–361). Oxford:
 Elsevier.
Stephen J. Page
Stephen J. Page is Associate Dean (Research) and Professor of
Business and Management in Hertfordshire Business School, University
of Hertfordshire. He is editor of the Journal Tourism Management. He is
author and editor of 46 books on tourism, leisure and events.
Preface
More than 20 years after the publication of the book The Economic
Geography of the Tourist Industry: A Supply-Side Analysis by Ioannides
and Debbage (1998), the strong link between the field of tourism and
regional science is well accepted in the research community. Nowadays,
almost all regional science conferences include at least one session
dedicated to tourism and tourism-related topics, acknowledging the
important role tourism plays in regional development. At the same
time, tourism scholars increasingly make use of regional science
methods to understand and analyse the dynamics of the industry in a
given regional context.
From the moment when Christaller analysed tourism through the
lens of regional science (Christaller 1964), dramatic structural changes,
mainly induced by technological innovations, have greatly influenced
the characteristics of the tourism and hospitality industries, but also of
tourist behaviour in space. Consequently, adding a spatial dimension to
the analysis of tourism and the tourism industry and thus explicitly
recognizing the locations where tourism-related activities are produced
and consumed offer significant added value to both branches of
economic research.
The aim of this book is to reinforce the interface between regional
science and tourism research by collating diverse contributions which
all focus on new challenges for the tourism and hospitality industry
from a regional science perspective, making use of appropriate
methodological approaches. This compilation of studies relating to
hospitality and tourism not only contributes to the tourism and
regional science literature jointly but will also assist tourism experts
and policy-makers alike in enhancing their understanding of the impact
and dynamics of current developments in the field. Challenges, from
both a scientific and policy perspective, such as migration, new types of
accommodation, segmentation of tourism demand and the potential
derived from tracking technology in tourism research are only a few of
the topics addressed in this book.
The book comprises five parts and 22 chapters. In the first part,
Firms in the Tourism Industry, Power, Doran and Ryan analyse the
impact of agglomeration economies on the dynamics of births and
deaths or firms in the tourism sector. The impact of location on the
survival of tourism firms is analysed in the chapter written by Cracolici,
Espa, Giuliani and Piacentino, whereas the chapter by Ö ner and Larsson
considers the determinants of restaurant location at a sub-city level. All
these contributions make use of geo-coded data related to tourism and
hospitality firms and thus reveal the power of regional science
approaches and theories in the analysis of spatial-referenced data in
the context of tourism, whereas Backman and Klaesson analyse the
assimilation process of foreign-born workers in the Swedish hospitality
industry. They provide evidence on the importance of the hospitality
sector with respect to the prospects of employment and integration for
foreign-born individuals.
The second part is dedicated to Temporal and Spatial Variability in
the Analysis of Tourism. Here, some important analytical regional
science tools are applied in an analysis of air traffic flows by Reynolds
and of the spatial distribution of Airbnb throughout the USA by Akhtari.
Ferná ndez-Morales offers a regional perspective for the analysis of the
tourism seasonality of hotel demand in the region of Andalusia,
whereas Martin and Delmelle propose the application of a spatial
interaction model for an analysis of the attractiveness of wine tourism
in North Carolina. In a different vein, Fagence’s contribution reflects on
the process of ‘thinking geographically’ in the analysis of stories. By
deploying an Australian story, the spatial and the semiotic
characteristics of ‘space’ inherent in heritage-based tourism are
revealed.
Much interest among regional scientists is directed at the broader
economic and social impact of tourism, which is third part’s overall
theme. A global, inter-country input–output approach is provided in the
contribution by Alsamawi, Fritz and Yamano, who are applying OECD’s
global inter-country input–output tables to measure how much value
added is induced by tourism consumption across a broad range of
industries. The impact of tourism on second home markets and
agriculture is the issue dealt with in the chapters by Carrascal and
Gutiérrez (Spain) and Salihoglu and Gezici (Turkey), respectively.
Benefits and limits of commercial gambling as a tourism development
strategy are deeply analysed in the chapter by Geisler, whereas the
contribution by Kashian, Choton and Samaranayake’s focuses on
Country Fairs and their impact, with applications to the state of
Wisconsin (USA).
The heterogeneous nature of the tourism industry is reflected by
the contributions contained in the fourth part, Tourism Segments and
Tourist Behaviours. In this section, specific tourism segments are
analysed based on a variety of perspectives. Reid presents a state-of-
the-art description of the relationship between craft beer and tourism,
presenting opportunities for future growth and destination
development. One of the most controversial tourism segments, cruise
tourism, is analysed in the chapter by Ferrante, Pavlić and De Cantis, in
which new technologies are used to analyse cruise passengers’
behaviour at the destination. Theoretical models of tourist behaviour
are discussed in the contribution by Birenboim, Anton-Clavé, Russo and
Shoval. By virtue of the availability of detailed information relating to
tourist behaviour in the PortAventura Theme Park, collected using GPS
technologies, structural factors and personal characteristics are
analysed as the potential determinants of tourist behaviour in a space-
time dimension. An in-depth analysis of tourist behaviour and of the
main characteristics of these peculiar tourism niches may assist in
destination management and the development of suitable policies and
strategies.
The fifth part of the book contains Environmental Perspectives and
Tourism Policy as one of the greatest challenges of the twenty-first
century. The aim of the chapter by Cole is to propose a Global Tourism
Destination Model in which the dynamics of internal and external
forces of a given destination are linked to each other; he describes the
degree of attractiveness, cluster synergies and congestion at a given
destination, with an application to specific Caribbean islands. The
initiatives emanating from the World Tourism Organization with regard
to the measurement of tourism sustainability are presented in the
chapter by Tejada, Moreno and Romero, with an application to the
Andalusia region in Spain. The contribution by Tang and Lau includes
an analysis of the impact of climate change on demand for tourism
services in Malaysia via a dynamic panel data approach. A policy-
oriented approach is presented in the chapter by Pezzi and Punziano,
which focuses on processes of innovation in the hospitality industry
with a focus on hinterland areas in Italy. Finally, the impact of tourism
taxation on tourism demand is the focus of the contribution by Biagi,
Brandano and Pulina. Causal inference approaches, such as the
synthetic control method, are applied, thereby revealing the great
potential deriving from the application of such empirical approaches to
tourism research.
The editors of this volume hope that all contributions will
strengthen the link between regional science and tourism by
addressing questions probing to professionals and by advancing into
current research frontiers in the regional science field of tourism,
thereby also shaping the research agenda for young scholars. A huge
variety of challenges in tourism research remains; regional science
theories and methods offer a means to tackle these challenges and pave
the way for more science and evidence-based tourism policies.
Finally, the editors wish to express their appreciation to Johannes
Glaeser for having suggested to collect contributions for a volume of the
Advances in Spatial Science series by Springer and to Barbara Fess,
Senior Editor for Economics and Political Science at Springer, for her
invaluable support throughout the compilation process. Our heartfelt
gratitude also goes to all authors and reviewers, and we apologize for
an editing process which has often been slow and tedious. We never
lost sight, however, of our goal to publish a book interesting to regional
science and tourism scholars alike. It is left to the readers of this book
to judge if this goal was achieved.

References
Christaller, W. (1964). Some considerations of tourism location in
Europe: The peripheral regions-under-developed countries-
recreation areas. Papers of the Regional Science Association, 12(1),
95–105.
Ioannides, D., & Debbage, K. G. (Eds.) (1998). The economic
geography of the tourist industry: A supply-side analysis. Psychology
Press.
Mauro Ferrante
Oliver Fritz
Özge Öner
 Palermo, Italy
Wien, Austria
Cambridge, UK
February 2020
Contents
Introduction
Ö zge Ö ner, Mauro Ferrante and Oliver Fritz
Firms in the Tourism Industry
Spatial Effects in Regional Tourism Firm Births and Deaths
Bernadette Power, Justin Doran and Geraldine Ryan
Microgeography of Restaurants:​Sub-City Analysis of Restaurant
Location and Colocation Using Swedish Geo-Coded Data
Ö zge Ö ner and Johan P. Larsson
Firm Demography in the Accommodation Industry.​Evidence from
Italian Insular Regions
Maria Francesca Cracolici, Giuseppe Espa, Diego Giuliani and
Davide Piacentino
The Importance of the Hospitality Sector in Integrating Foreign-
Born Individuals in Sweden
Mikaela Backman and Johan Klaesson
Temporal and Spatial Perspectives in the Analysis of Tourism
The Role of Air Transport in Tourism Market Access:​A Framework
for Capturing Spatial, Temporal and Industry Variability in Air
Traffic Flows
Aisling Reynolds-Feighan
Tourism Seasonality Across Markets
Antonio Ferná ndez-Morales
Using a Qualitative Science Approach to Reveal the Tourism
Potential of a Story from History:​Where Regional Science Meets
Heritage-Based Tourism
Michael Fagence
Proximity to Hotels and Airbnb Home Sharing Accommodations
Mitra Akhtari
Modeling Spatial Attractiveness to Wine Tourism in North
Carolina, U.​S.​A.​
 Miriam E. Martin and Eric M. Delmelle
The Impacts of Tourism
Measuring Economic Impacts of International Tourism Activities:​
A Global Inter-Country Input–Output Approach
Ali Alsamawi, Oliver Fritz and Norihiko Yamano
Exploring the Spatial Link Between Tourism and Construction:​
How Touristic Landmarks Affect the Second-Home Market in Spain
André Carrascal-Incera and Diana Gutiérrez-Posada
The Impact of the County Fair—Building an Economic Toolbox
Russ Kashian, Suvojit Choton Basu and Pasan Samaranayake
Using Casinos for Growth:​The Benefits and Limits of Commercial
Gambling as an Economic Development Strategy
Karl R. Geisler
Linkages Between Tourism and Agriculture:​The Case of Turkey
Gü liz Salihoglu and Ferhan Gezici
Tourism Segments and Tourist Behaviours
Craft Beer Tourism:​The Search for Authenticity, Diversity, and
Great Beer
Neil Reid
Individual and Contextual Determinants of Cruise Passengers’
Behavior at Their Destination:​A Survival Approach
Mauro Ferrante, Ivana Pavlić and Stefano De Cantis
Structure Versus Agency:​Which Best Explains Tourist Activity in a
Destination?​
Amit Birenboim, Salvador Anton-Clavé, Antonio Paolo Russo and
Noam Shoval
Environmental Perspectives and Tourism Policy
Innovation, Competitiveness, and Sustainability in Tourism
Clusters:​An Empirical Model of Caribbean Destinations
Sam Cole
Exploring the Impact of Political Stability and Climate Change on
Inbound Tourism Demand:​Evidence from Dynamic Panel Data
Analysis
Chor Foon Tang and Evan Lau
Measuring Tourism Sustainability:​The Case of Andalusia
Pilar Tejada, Isidoro Romero and Pilar Moreno
Tourism Planning and Tourism Development in the Italian Inner
Areas:​Assessing Coherence in Policy-Making Strategies
Daniele Mantegazzi, Maria Giulia Pezzi and Gabriella Punziano
Tourism Taxation:​Good or Bad for Cities?​
Bianca Biagi, Maria Giovanna Brandano and Manuela Pulina
Concluding Remarks
References
© Springer Nature Switzerland AG 2021
M. Ferrante et al. (eds.), Regional Science Perspectives on Tourism and Hospitality,
Advances in Spatial Science: The Regional Science Series
https://doi.org/10.1007/978-3-030-61274-0_1

Introduction
Ö zge Ö ner1 , Mauro Ferrante2 and Oliver Fritz3
(1) Department of Land Economy, University of Cambridge,
Cambridge, UK
(2) Department of Culture and Society, University of Palermo, Viale
delle Scienze, building 15, 90133 Palermo, Italy
(3) WIFO - Austrian Institute of Economic Research, Wien, Austria

Özge Öner
Email: oo263@cam.ac.uk

Mauro Ferrante (Corresponding author)

Email: mauro.ferrante@unipa.it

Oliver Fritz
Email: oliver.fritz@wifo.ac.at

1 Worlds Collide: Regional Science and Tourism

Research
Although the relevance of regional hierarchies for the analysis of
tourism activities has early historical roots (see, e.g. Christaller 1964),
service sector at large and tourism activities in particular did not gain
much momentum within the regional science literature until the mid-
80 s. Similarly, tourism studies have been around for almost half a
century following its establishment as an independent domain of
inquiry following post-World War II era (Butler 2015). However, the
relevance of regional hierarchies for tourism activities has not been an
integral part of this strand of literature (Cole 2007). With this book, we
aim at contributing to the existing efforts1 to bridge these two
extensively related strands of literature where we compiled several
individual contributions that present how tourism researchers can
integrate regional thought into their analysis and at the same time how
regional scientists consider tourism as a vital part of the regional
economic systems. The book by no means is a complete depiction of
how these two strands of literature collide or draw parallel to one
another, but rather an attempt to contribute to the existing efforts of
tourism researchers and regional scientists to marry these two strands
of literature for a better understanding of the sector and its significance
for regional economies.
Tourism, both in terms of the individual economic activities nested
within and as a sector at large, has attracted attention from within the
various branches of social sciences, with each discipline approaching
tourism from a different perspective and utilizing different tools for
analysis. Gyr (2010) states: “Today, tourism studies mean the multi-
disciplinary bundle of academic approaches in the sense of an
undisguised “transdiscipline”, which can find different applications.” (Gyr
2010, p. 1). The fact that there exists very little to no integration of the
different disciplines that deal with tourism certainly has some
advantages, but also the transdisciplinary nature of tourism research
imposes many challenges. In fact, there exists several academic
accounts that cover some of these challenges in tourism research (see,
e.g. Singh 2015; Liburd 2012; Cole 2007). The particular challenge we
hope to shed some light onto by way of this book is the consideration of
geography and in particular the limited attention paid to interaction
between different levels of geography in tourism research.
Despite its common use, it is difficult to argue for the existence of a
single tourism industry. Tourism rather refers to a set of multifaceted
economic activities and many industries operating simultaneously in a
complex ecosystem, forming what could better be defined as tourism
industries (Leiper 2008). All the activities, agents, and many industries’
compilation of which corresponds to tourism have a strong spatial
feature attached to them. There is no shortage of empirical evidence
that shows how economic activity is not randomly distributed across
space. Depending on the nature of the economic activity, some first-
nature and second-nature geographical features dictate the presence as
well as the performance of different economic activities (Brakman et al.
2001). There are, however, two aspects of tourism that distinguishes it
from other sectors. First is the nature and extent of spatial dependence
we observe for tourism activities. As Middleton and Clarke (2012, p.
291) puts, “location, location, location” has been the mantra for
profitable tourism businesses and for tourism ecosystems. The spatial
dependence in tourism is unique to the extent that the services offered
by the individual actors of the sector chiefly cannot be carried away by
the consumers, making both the production and the consumption of
tourism services more spatially sticky than some other sectors, such as
manufacturing or traditional retail. At times, tourism sector emerges in
certain places as a by-product of exogenous amenities (i.e. first-nature
geography) that are inherent to the place, such as the number of sunny
days, access to coast, or beautiful mountains. In other, mostly urban
places, we see its emergence as a function of endogenous features of
the geography (i.e. man-made amenities) such as clustering of retailing,
art, businesses, and recreational activities. These two sets of
geographical features, the endogenous and the exogenous, cannot be
thought of orthogonal to one another for the presence and prominence
of tourism in a particular geography. In fact, the success and the failure
of tourism in a region itself feed back into some of the features that
leads to its emergence in a particular location in the first place. This
type of simultaneity relates to the emergence of path dependencies
between the performance of the sector itself and features of the
geography it occupies, which makes it methodologically and
conceptually challenging to address the impact on and from tourism in
a particular region. Here we once again see the emergence of parallels
between tourism research and regional science, where both strands of
literature devote increasing attention to address evolutionary pathways
through which the dependence between spatial features of a region and
its tourism sector can be addressed (see, e.g. Boschma and Frenken
2006; Martin and Sunley 2007; Brouder and Eriksson 2013; Brouder
2014; Brouder and Ioannides 2014; Sanz-Ibá ñ ez and Clavé 2014).
Such spatially sticky features of a geography and its relevance for
tourism are often discussed within the context of tourism destinations;
a term exhaustively used in tourism literature. Despite being a rather
established term, there exists some debate around its definition. What
is considered to be a tourism destination differs dramatically depending
on the particular disciplinary tradition, as well as the institutions and
actors that are in the focus of a particular study. Saraniemi and Kylä nen
(2011) offer four categories under which they nest different
discussions on and considerations for tourism destination; (i) economic
geography-oriented, (ii) marketing management oriented, (iii)
customer oriented, and last but not the least (iv) cultural dimension.
Particularly relevant to the book at hand, although the economic
geography-oriented approach traditionally considered destinations as
rather static geographical entities with fixed set of features and
resources, more recent literature increasingly recognizes the feedback
effect; that is how the very act of tourists choosing to travel to a
particular destination shapes what could initially be considered a fixed
feature of the destination. This type of dynamic thought for
understanding what tourism destination means implies not only that
the local economy and local culture will be influences by tourism itself,
but also there is an increasing attention paid to the fact that even first-
nature geographical features are subject to change as a result of
tourism, which constitutes the interest for the environment- and
sustainability-related questions within the literature.
Second, and an equally important feature of tourism that
differentiates the sector from others is that its very existence depends
on the ability to bundle a number of economic and cultural activities;
from various branches of the hospitality sector to transportation. The
fortune of one economic activity becomes dependent on the fortune of
the other in tourism ecosystems. Such dependencies vary across
different types of tourism activities and locations vastly. As Leiper
(2004, 2008) promotes, it is in fact quite unfortunate to call it the
tourism industry as it is problematic to establish a theoretical
foundation or identify empirical regularities for one giant industry.
Whereas tourism industries as a term could more accurately encompass
the multifaceted nature of many economic activities and agents, we
consider to be a part of the greater tourism ecosystem. The multi-
sectoral nature of tourism has several implications and covered by a
diverse body of literature. One way to address the dependencies across
different economic activities that are related to tourism is by way of
studying the production chains and value creation. Analysing
production processes by fractionalizing its components in a sequential
manner is central in economics literature that uses input–output
approach, which is also used as a useful tool for understanding value
chain in tourism activities, although to a lesser extent (Romero and
Tejeda 2011; Clancy 1998, 2002).
Another aspect of multi-sectoral nature of tourism relates to the
governance of the value chain; complementarities, collaborative efforts,
as well as tensions between the stages of the production and the actors
involved in the governance of these stages (Song et al. 2013; Bush et al.
2015). Neither the different sectors involved in the production process
nor the governance of tourism value chain is independent of space.
With regards to production chain, the geographical reach of industries
involved in the production chain differs, so modelling efforts have to
take into consideration the specificity of the geographical aggregation
for each economic activity related to tourism. The governance of value
chains, likewise, is heavily dependent on the geography. Different actors
and subsectors involved in tourism value chain are governed by
institutions operating at different geographical levels, most of which
function in interaction with one another; from regional (e.g.
municipalities and city councils) to national (e.g. ministries to national
sector organizations), and even the supranational (e.g. EU commission,
international tourism organizations, multi-national firms).
Understanding the multi-level governance in tourism, both for its
presence and its performance, requires understanding the spatial
dependencies likewise.

2 Structural Changes and Tourism

Consecutive structural changes, from globalization to urbanization, and
more recently digitalization rapidly changed the consumer behaviour,
as well as the means and methods of production globally. Post-
industrial era brought about the triumph of services economy, which
shifted—at least partially—the focus of the literature from initially
agriculture and later manufacturing towards the knowledge economy
and consumer services. Today we are experiencing yet another phase
that can roughly be referred to as the experience economy where more
value than ever is derived from the experience of consuming a product
compared to the traditional ways we measure the value of the
commodities and services (Pine et al. 1999; Andersson 2007; Oh et al.
2007). An integral part of this shift is the way tourism is consumed; in
particular the democratization of travel and wider access to means to
travel further distances. In the context of rapidly rising collaborative
economy, digital sharing platforms enabled individual agents take part
both in the supply and the demand of tourism and related services.
Today, we see what initially was experimental means of tourism as
established and significant elements within the tourism supply chain,
such as Couchsurfing and AirBnB (Dredge and Gyimó thy 2015).
Particularly, over the course of past few decades, the debate on the
importance of leisure and tourism services by both scholars and local
and national policymakers gained momentum (Clark 2004; Grodach
2011; Markusen and Schrock 2006; Mellander et al. 2011; Sharpley and
Telfer 2015). Participation in leisure, recreation, and cultural activities
is tightly linked to individual well-being and overall life satisfaction,2
from travelling to time spent in restaurants and cafés.
As much as we consider tourism as a part of modernity, with
dramatic expansion particularly following World War II, its historical
roots date back to classical world. Early forms of travel can be found in
ancient Egypt, where a handful of privileged would visit famous
monuments and relics. We see the records of similar journeys in Greece,
where some but extremely limited number of individuals would travel
to participated in the sporting competitions or the early Olympic Game
(Gyr 2010). Tourism becoming a global phenomenon, however,
corresponds to structural changes in the economy following rapid
industrialization. Two things in particular happened that are tightly
linked to rise of tourism; increasing wages and the emergence of a
middle class, and a stark decline in number of hours worked, hence a
notable increase in leisure time. According to the data collected by
Maddison (1988) for a number of OECD countries,3 the number of
hours worked annually is nearly halved (from roughly 2900 h to 1600)
over the period of 1870–1979. While most people in labour had
virtually no time to allocate what we would consider to be vacation in
modern times in 1900, roughly hundred years later workers in most
European countries have approximately 30 vacation days per year, and
this is excluding the weekends.4 According to Eurostat, in 2017 alone,
EU residents spent an estimated EUR 467 billion on tourism trips, more
than half of which was allocated to trips abroad.5
Globalization has probably been the most eminent structural
change for tourism, and globalization itself is in fact shaped by tourism.
It extends beyond internationalization of tourism activities and actors.
In his much-debated book “The World is Flat”, Thomas Friedman
(2005) argued for a new era of globalization that he called
Globalization 3.0. Unlike 80s and 90s where globalization could largely
be defined as global integration led by multi-national companies, in the
2000s, he argued that we have experienced a rapid global convergence
in technology. One the one hand, distance is dead considering the ease
of travel. On the other, distance has never played a more important role
considering the ever-increasing disparities across different regions
within the countries.
Computational advancement and IT revolution becoming an integral
part of a complex global supply chain is of particular importance for
tourism and emergence of mass tourism. Tourism researchers during
this period discussed at length the implications of globalization for
tourism and how tourism in turn influences globalization itself (see, e.g.
Knowles et al. 2004). However, globalization in the context of tourism is
a double edge sword. On the one hand, it led to overall economic
growth, with the result of global poverty having decreased over the
years. While in industrialized countries its relative importance became
more notable over traditional economic activities like manufacturing, in
a number of the developing countries tourism superseded the agrarian
economic structure where the industrialization is bypassed altogether
(see Eadington and Smith 1992). On the other hand, globalization in
tourism activities came with negative externalities with significant
regional implications; first and foremost, related to physical
environment. Tourism research has dealt with sustainability in a large
body of literature (see, e.g. May 1991; Williams and Shaw 1998;
Casagrandi and Rinaldi 2002; Sharpley 2009). Looking at the volume of
research on sustainable tourism, one may believe that the research is
satiated. From a regional perspective, however, we believe that the
work just began. Traditional debates on the uneven consequences of
economic development (Mowforth and Munt 2015), on the analysis of
the relationship between tourism and poverty (Blake et al. 2008;
Saayman et al. 2012), and on the impact of tourism in ethnic
communities (Van den Berghe 1994), are nowadays enriched by the
current discussion on the potential dramatic consequences of climate
change, and on the more adequate policy responses, as one of the
greatest challenges of our century (Scott et al. 2012).
Another notable trend that reshaped tourism and gave way to
alternative tourism models is rapid urbanization. Today, more than half
of the global population is living in cities. Story of urbanization can in
fact be told as the story of modern civilization. In regional science
literature, urban growth is commonly attributed to microfoundations of
agglomeration economies. These are typically described as the positive
externalities associated with sharing (e.g. sharing of infrastructure and
intermediary services), matching (e.g. between labour and potential
employees), and learning effects (i.e. knowledge-spillovers) (Duranton
and Puga 2004). A significant body of research within urban and
regional economics tried to nail down the extent to which these
positive externalities arise due to specialization vs. diversity of
economic activities in space. The concept of specialization is often
outlined by localization economies in Marshall, Arrow, and Romer
(MAR) tradition, where an area benefits from the clustering of
economic activities of similar nature. Industrial zones or regions that
are specialized in one or few economic activities are often marked as
the examples of such agglomerations. In the context of diversity,
however, it is argued that the lion share of agglomeration externalities
arises due to urbanization economies, as outlined by the seminal work
of Jacobs (1970, 1984). The basic argument is that the positive
externalities associated with agglomeration can largely be realized
thanks to cross-pollination of ideas and activities in a diverse economic
milieu, typically found in large metropolitan areas.
There is somewhat controversy concerning the actual nature and
sources of these two forces; diversity and specialization. In the context
of tourism, it is somewhat challenging to differentiate between what
could be considered a specialized or diverse tourism milieu. On the one
hand, we see “tourist cities”, representing an unusual form of
urbanization where cities or system of cities are built primarily for
consumption (Mullins 1991, p. 326), which could put them in the
category of “specialized cities”. On the other, tourism as an economic
activity almost certainly requires a sufficient degree of diversification of
economic activities, which puts tourism within the context of diversity.
More recently, the urban and regional science literature began to
move away from what is seemingly a false dichotomy between
specialization and diversity in urban space, and increasingly argue that
these two forces coexist in space but in different spatial aggregations.
Recent empirical work finds that while localization economies appear
to be bound to the immediate neighbourhood level within cities,
urbanization externalities grow stronger at larger spatial scales
(Andersson et al. 2019). At the heart of this debate lies spatial systems
and dependence of different spatial aggregations on one another once
again. This debate is far from being satiated and its paramount
relevance for tourism. Studying different aspects of tourism at the right
level of geographical aggregation not only would provide the possibility
to understand different mechanisms through which certain positive
externalities can be capitalized on but also helps us understand how
negative externalities can be mitigated.
Urbanization and its implication for tourism on one hand, a parallel
literature has emerged the past few decades investigating alternative
tourism models associated with rural space. Rapid urbanization
brought about challenges and opportunities linked to rural tourism
(Lane 1994). The literature presents arguments for tourism’s potential
to stimulate economic and social development in rural places that are
battling economic decline due to structural shift away from agrarian
industries (Sharpley 2002). At the same time, the ever-increasing
interest in touristic activities in rural and peripheral places brings
about the need to take sustainability into account (Bramwell 1994).

3 Regional Science and Tourism

The importance of tourism on the performance of a local economy is
manifold. First, leisure and hospitality services often represent a
significant share of the total economic activity in a region. Such
characteristic of tourism makes it important for employment and
economic growth. Second, services offered by the actors in the tourism
sector are recognized as essential for the attractiveness of a region.
Tourism and leisure services can be thought of as regional amenities
because they make available a range of possibilities for consumption,
experiences, and recreational activities. The most notable aspect of
tourism, however, is its spatial dependence and the importance of
geography.
Geography matters! Empirical regularities show that economic
activity is not distributed randomly nor evenly across space. Over time,
and across countries we see a clustering of people and firms. Certainly,
such clustering has more than one reason. For one, people like to
interact with one another, thus, spatial proximity between them
matters. They may actively choose to live in or visit a place simply
because they like the atmosphere and the natural amenities. Regional
science explores the economic motives behind the spatial patterns of
economic activity and economic agents but does so in a way that is
cautious of hierarchies across different geographical levels.
There are several aspects of regional science as a field that are of
value for tourism research. First, the importance of geographical
aggregation and the interaction between different levels of geography.
What is the right level of geography for tourism analysis? Is it the
neighbourhood, or parts of a neighbourhood we are interested in?
Perhaps the city itself, or even the region it is located in? Maybe we are
interested in the larger European regions? Geography can be
aggregated to larger units or disaggregated into smaller units. One can
study a phenomenon at the neighbourhood level, at the city level, at the
regional level, at the national level, or event at the global level. But
doing so, the choice of geographical aggregation can neither be trivial,
nor should be done arbitrarily. When choosing the right level of
geographical aggregation, one must be cautious about which
mechanisms operate at which level. For example, when studying a
policy intervention at the municipal level that is designed to boost the
rate of start-ups within the tourism sector, one must carefully consider
the economic and institutional structure of the municipality and the
region, but more importantly how the two interacts. What would higher
start-up rate in a particular locality within the region imply for the
region at large or the neighbouring regions? Winners and losers of such
policy intervention may look dramatically different once different
geographical levels, as well as spillover across borders are considered.
Whereas, for example, studying peer-effects among the tourism actors
such as restaurateurs, we may need to focus on a much more
disaggregated level of geographical unit such as a neighbourhood, and
dwell into the microgeography of cities. As obvious as it may sound, we
see that in much of the economics and also partly in tourism literature,
a careful consideration of the right geographical aggregation is
secondary at best.
Such multi-level feature of tourism supply and demand can be
addressed by way of regional science theories and methods that
explicitly model regional hierarchies and the relevant market reach for
different subsectors and agents. Despite some of its shortcomings,6
New Economic Geography (NEG) tradition is one such example which
can help identify a home-market effect for the many industries that
constitute tourism industries altogether; that is for which subsector of
the greater tourist ecosystem the demand extends beyond the borders
of the region and for which it is predominantly local (Ö ner and
Klaesson 2017).
A related matter is the endogeneity of production factors and how
regional science literature at large considers production factors.
Resources, such as capital and labour, as well as institutions and the
entrepreneurial capital are determined by the very characteristics of
the geography. In turn, they shape the local economy itself. Such
simultaneous causality is of great importance. Since economic agents,
i.e. individuals, optimize their location and the location of their
ventures continuously, they move, and when they move, they change
with the move itself. An individual actor, all else equal, is a different
once it is considered in another local market. The features of the new
market do not just add on to the individual characteristics but alter
them. The same logic applies to the different goods and services sold in
the market as a part of the tourism bundle. The basic notion of regional
science is that “a good at a certain location and the same good at
another location are different economic objects, and the specification of
the location at which it will be available is essential” (Debreu 1959, pp.
29–30).
At the heart of regional science, we also see the interaction between
the agglomeration and dispersion forces which once again deals with
spatial aggregation and spatial dependencies. Price competition, high
transportation costs, and land use foster the dispersion of production
and consumption, therefore, firms are likely to cluster within large
metropolitan areas—particularly when they sell differentiated
products—where transportation costs (particularly to the end
customer) is low and land use is efficient (due to building height as well
as urban transportation networks). Cities nested within regions
provide a wide array of final goods and specialized market that make
them attractive to consumers and workers. Agglomerations are the
outcome of cumulative processes involving both supply and demand
sides. It takes a long time for them to emerge, and often they emerge
through evolutionary pathways, i.e. path dependence. In other words,
they are extremely difficult to “create” by intervention. Consequently,
they are quite persistent. Originating from the arguments of Myrdal
(1957), the notion of cumulative causation was used to explain how
regional convergence may not be realized as regional disparities may
not be persist. However, by the way of exogenous shocks, paths can be
rapidly weakened or altered. These events are referred as path-
breaking events. Such shocks, such as a global financial crises or
pandemic, to a larger extent effect industries and entrepreneurs
operating in tourism-specialized markets. The shocks may happen at
the macro level but their effects at the local level vary dramatically. If
we consider the country as a unit of analysis that is built up of many
differentiated local markets, while the country itself may be in
equilibrium, most of the regions will not likely to be in one. As some of
these regions will be benefiting from agglomerative (centripetal) forces,
the others will suffer from dispersion (centripetal forces). This rather
inevitable outcome also implies that while some local markets prosper,
others will fall. Regional science is not only interested in how these two
opposing forces operate in different levels of aggregation, but also in
their potential implications, and what can be done about it—if anything
should be done about it.
Second, and equally important aspect of regional science literature
that is of great value for tourism research, is the tools by which impact
analyses is performed. Tourism is seen as a sector that promises
economic benefits to many lagging and peripheral regions with a low
degree of industrialization and unfavourable conditions to attract
manufacturing industries. For this reason, the (positive) effects of
tourism on regional growth have received a lot of attention—not at
least promoted (and funded) by regional and local tourism
organizations which aim to demonstrate that public funds for tourism
companies result in significant economic benefits. A key issue when
assessing the economic impact of tourism concerns its wider economic
impact, i.e. its indirect and induced effects. It is argued that it is not only
the tourism sector (hotels, restaurants, museums, etc.) but numerous
other sectors benefiting from visitor spending.
Macroeconomic-oriented impact analyses, however, are mostly
performed outside the academic world by private consulting firms but
also universities keen to attract additional funds. In the academic
literature, this topic is hardly present anymore—impact analysis mostly
based on input–output-type models is not on the frontier of regional
science anymore even though it is still present in journals in the field of
tourism economics (see, e.g. Tohmo 2018; Ribeiro et al. 2017; Kim et al.
2017; do Val Simardi Beraldo Souza et al. 2019; Khoshkhoo et al. 2017;
Mazumder et al. 2017). This also implies that less attention is being
paid to scientific standards neither with respect to models applied nor
regarding methodological standards for the analysis conducted.
Besides (regional or multi-regional) input–output models, by far the
most common type of models applied for assessing the economic
impact of tourism, CGE models have been used as well (see, e.g. Allan et
al. 2017; Blake 2009; Frent 2018; Fritz et al. 2019; Li et al. 2011;
Mahadevan et al. 2017; Sacco and Cassar 2019). Tourism is not an
industry separately listed in the system of national (regional) accounts;
instead tourism-related goods and services are produced by companies
of various industries. The economic contribution of tourism is therefore
often estimated via a tourism satellite account (TSA) which is added to
the existing systems of national accounts. TSA are available mostly on a
national scale but sometimes for regions as well. The United Nation’s
World Tourism Organization (UNWTO) provides a methodological
framework for such accounts to ensure comparability across countries
and regions (see United Nations 2008). This framework accounts for
direct effects of tourism only; many TSAs, however, are extended to
include estimates of indirect/induced effects as well (see, e.g. the
Austrian Tourism Satellite Account).
 With regards to impact analysis in tourism research, we also see the
increasing use of experiments and quasi-experimental designs that
allow for causal inference. A spillover from mainstream economics
literature, regional scientists are increasingly interested in data work
that builds on empirical designs which particularly targets a cause-and-
effect relationship. The benefit of such approaches for tourism and
hospitality is undeniable (Viglia and Dolnicar 2020).

4 Conclusion
As Cole (2007) highlights: “A major challenge of contemporary tourism
studies is to comprehend the systemic interaction between the smallest
entities and regions and the largest” (p.183). To this end alone, tourism
research has much to gain from regional science. Likewise, regional
science literature should evolve further to account for the significance
of tourism for regional development, and also take into consideration
alternative ways to examine tourism activities both in terms of methods
used and also by allowing for more flexibility for approaches on a
neoclassical to normative spectrum (Calero and Turner 2020). Today,
regional science literature at large is moving away from dichotomies
such as urban–rural, central–peripheral, national–local. Instead, a
spectrum of locations is considered when economic activities and their
relevance for the local context are examined. This is a fortunate
development considering the multi-level nature of tourism supply and
demand. Likewise, overemphasis on the importance of tourism for
regional economic growth is increasingly balanced by new models of
tourism, their relevance for local elements, as well as methodological
advancements that can allow for identifying both the impact of tourism
on local economy, but also the mechanisms through which it operates.
This book provides a collection of papers which combine aspects of
regional science and tourism research and look at specific issues from
both angles. It thus attempts to demonstrate how these two fields can
be merged to gain valuable insights into local and regional economic
systems which feed on tourism and the hospitality industry as
important business activities but also how tourism is shaped by spatial
characteristics. Its strength lies in the variety of different topics offered
to readers as appetizers and motivation to engage in further
explorations along these lines. We dearly hope many will accept and
enjoy this offer.

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Footnotes
1 See e.g. a recent detailed review by Calero and Turner (2020) on regional
economic development and tourism.

2 European Commission, Eurofound, Quality of life in Europe, Subjective well-being,

3rd European quality of life survey (2013).

3 Selected countries in Maddison (1988) Australia, Belgium, Canada, Denmark,

France, Germany, Netherlands, Norway, Sweden, United Kingdom, United States.

4 See Andersson and Andersson (2006) for a detailed discussion.

5 See Eurostat: https://​ec.​europa.​eu/​eurostat/​statistics-explained/​index.​php/​
Tourism_​statistics_​-_​expenditure.

6 See Martin and Sunley (2001) for a critique.

Firms in the Tourism Industry
© Springer Nature Switzerland AG 2021
M. Ferrante et al. (eds.), Regional Science Perspectives on Tourism and Hospitality,
Advances in Spatial Science: The Regional Science Series
https://doi.org/10.1007/978-3-030-61274-0_2

Spatial Effects in Regional Tourism

Firm Births and Deaths
Bernadette Power1 , Justin Doran2 and Geraldine Ryan3
(1) Department of Economics, University College Cork, Cork, Ireland
(2) Spatial and Regional Economics Research Centre, Department of
Economics, University College Cork, Cork, Ireland
(3) Department of Accounting and Finance, University College Cork,
Cork, Ireland

Bernadette Power (Corresponding author)

Email: b.power@ucc.ie

Justin Doran
Email: justin.doran@ucc.ie

Geraldine Ryan
Email: g.ryan@ucc.ie

Keywords Tourism entrepreneurship – Agglomeration economies –

Tourism firm deaths – Tourism firm births

1 Introduction
Tourism is one of the largest and fastest growing economic sectors in
the world, providing 292 million jobs and accounting for 1 in 10 jobs in
the global workforce (WTTC 2017). While traditionally the sector was
considered to be stable with little innovation (Hjalager, 2002, 2010;
Sundbo et al. 2007), this is no longer the case (Walsh et al. 2011). Shifts
in the global economy along with changing consumer demands mean
that the industry has become extremely competitive and is now
characterised by continuous transformation (Buhalis and Costa 2006;
Camisó n and Monfort-Mir 2012; Cooper and Wahab 2005; Martínez-
Romá n et al. 2015). Entrepreneurship is receiving increased attention
within tourism research (Carmichael and Morrison 2011; Solvoll et al.
2015) largely due to the vital role entrepreneurs, firm start-ups and
business failures play within the tourism industry.
Since 2000, growth in the travel and tourism sector has outpaced
that of the global economy. In 2016, for example, this sector contributed
3.1% to direct GDP growth while the global growth rate was lower at
2.5% (WTTC 2017) thus prompting researchers and policy makers to
explore the idea of tourism as a tool for regional development
(Briedenhann and Wickens 2004; Keeble and Wever 2016; Mose 2007;
Mü ller and Jansson 2006; OECD 2016). In the context of a depressed
national economy, tourism growth is regarded as a reasonable choice
for regional economic development (Hohl and Tisdell, 1995), allowing
peripheral and/or marginalised areas to take advantage of their unique
tourism-related resource endowments. Tourism-led development
plans, however, might not be entirely successful in these regions, as
tourism growth is heavily reliant on agglomeration economies rather
than mere resource endowments (Capone and Boix 2008). By opening
up regions to market forces and globalisation tourism can generate
economic benefits resulting in increased wealth and opportunities,
however, it can also exacerbate inequalities, increase competition and
lead to firm failure (Sharpley and Telfer 2014). Policy formation
requires an understanding of how tourism agglomeration impacts
entrepreneurship within regions. In this chapter, we focus on how
agglomeration economies impact enterprise birth and death rates
within the tourism sector.
Agglomeration economies describe the benefits that firms obtain
when they locate close to one another (Cortinovis and Van Oort 2015;
Glaeser 2010; Gouveia et al. 2017; Neffke et al. 2011). These economies
result from internal economies of scale within a firm (Krugman 1991)
and from external economies resulting from network benefits. We focus
on the latter which are spatial in nature. Frenken et al. (2007) and
others such as Rosenthal and Strange (2003), Beaudry and
Schiffauerova (2009) examine external economies like localisation,
diversification and urbanisation economies. Localisation economies
occur when firms benefit from the presence of other firms within the
same industry, diversification economies occur when firms benefit from
the clustering of a large variety of industries (either related or
unrelated), while positive urbanisation economies occur when firms
benefit from the size and density of an urban centre. In the latter case,
the benefit is from the scale of the entire urban economy rather than
the scale of the industry.
The empirical application of our research refers to the Irish
economy. Tourism has become one of Ireland’s greatest economic
success stories. European Union funds, along with public and private
sector investments have helped to improve and develop infrastructure,
accommodation and visitor attractions (Hurley et al. 1994), while
increased competition in the airline industry along with technological
innovation has dramatically improved access (ITIC 2013). The period
under investigation, 2007 to 2009, was a dynamic period in the Irish
economy. During this period, tourism receipts fell from €6.45 billion to
€5.36 billion, even though they continued to account for a relatively
constant share of gross national product (accounting for 3.7% in 2007
and 3.8% in 2009). Travers (2003) argues that tourism is a powerful
instrument of national and regional development in Ireland. It is a
particularly important source of economic activity in rural areas (ITIC
2010). Scenic rural areas in Ireland tend to be areas of agricultural
disadvantage and look towards tourism as a source of supplementing
income and as a source of direct and indirect employment (Gorman
2005). Many areas have developed strong tourism industries and
particular places have become synonymous with the word tourism.
Following the financial crisis, demand from the domestic market
proved to be resilient while international visitors, particularly from the
United Kingdom fell sharply (ITIC 2010). In this chapter, we use a
comprehensive dataset to examine the effect of spatial agglomeration
economies on firm births and deaths in the Irish tourism industry. For
comparative purposes, we also present the results for all firms in
Ireland. Our results are estimated at electoral division level. There are
over 3,000 electoral divisions in Ireland, each having a low geographical
size (average = 23 km) thus making them ideal for comparing regions.
Agglomeration economies have been studied in the area of regional
economic growth and prosperity (Capone and Boix 2008; Frenken et al.
2007; Hartog et al. 2012; Yang 2012; Yang and Fik 2014), but less is
known about the extent to which spatial agglomeration economies
affect regional firm births and deaths, particularly in the tourism sector
(Hjalager 2010; Yang 2012).
The rest of this chapter is organised as follows: Sect. 2 describes
recent literature about the effects of agglomeration on firm births and
deaths; Sect. 3 outlines our data and methods; Sect. 4 presents and
discusses the empirical results and Sect. 5 concludes.

2 Literature Review
While a large body of tourism literature has examined the demand for
tourism and the factors contributing to tourist flows and revenues, few
have considered the supply side and issues such as infrastructure,
agglomeration and market access (Yang and Fik 2014). Those papers
that have examined the issue are complex and cover a diverse range of
topics from the firm level to the industry and market level (Song et al.
2012). Early studies considered whether tourism, when studied from a
supply perspective, is an industry or a market (see Leiper (2008) for an
overview). Nowadays it is commonly recognised that tourism is neither
a single industry nor a single market (Dwyer et al. 2010; Stabler et al.
2009), and it is a composite product that involves a combination of a
variety of goods and services provided by different sectors, such as
transport, accommodation, tour operators, travel agencies, visitor
attractions, and retailing. Since local and regional factors play a role in
determining the potential success of tourism in any given region (Yang
and Fik 2014) further supply side investigations are needed so as to
help governments identify the destination-specific attributes that
explain regional variability in tourism growth.
Unquestionably, the birth of tourism firms contributes to the
economic and social well-being of a community. Tourism entrepreneurs
are responsible for the birth of these firms (Koh and Hatten 2002), and
without these entrepreneurs, beautiful landscapes, waterways,
buildings and cities might not be viewed as tourism resources. Some
authors argue that since entrepreneurs stimulate entrepreneurship, the
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