Tourism Development in Small Islands Across the World*










Jerome L. McElroy

Professor of Economics

Department of Business and Economics

Saint Mary's College

Notre Dame, IN  46556   USA

TEL: 574-284-4488

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*Paper presented at the Islands VII Conference, Institute of Island Studies, University of Prince Edward Island, Charlottetown, PEI  (June 26-30, 2002).


            The postwar history of small islands has been marked by two favorable development factors: the march of decolonization and the global spread of international tourism.  In the first case, since 1960 roughly 30 tropical/temperate islands across the five major oceanic basins have become politically independent (McElroy and Mahoney, 2000).  Other island territories have achieved significantly greater internal self-government and have used this new-found autonomy—the so called “resource of jurisdiction”—to create tax havens and diversify into other nontraditional activities like off-shore finance and ship registry (Baldacchino and Milne, 2000).  In the second case, the remarkable transformation of tourism into the world’s largest industry—accounting for roughly a tenth of global GDP, employment and capital formation (WTTC, 2001)—has coincided with the restructuring of small island economies away from traditional exports like sugar and copra toward mass tourism and related construction.  The results have transformed insular landscapes across the Caribbean, Mediterranean and North Pacific and created the so-called “Pleasure Periphery” of North America, Europe and Japan respectively (Turner and Ash, 1976).

(a) The Problem

            However, much of this growth has been overly rapid, unplanned and intrusive and has damaged insular eco-systems (Briguglio and others, 1996).  In the Caribbean, tourism expansion has directly or indirectly caused deforestation and erosion of upland forests for condominium developments and road works, as well as beach loss, lagoon pollution and reef damage from sand mining, dredging and boat anchoring (McElroy and de Albuquerque, 1998).  Nearly 30 percent of the reefs are at high risk because of runoff and discharges of untreated municipal and hotel waste and pollution from pleasure yachts and cruise ships (Bryant and others, 1998).  Partly as a result, since 1985 fish catches are off nearly 50 percent in gross tonnage (UNEP, 1999b).

            In the Mediterranean, large-scale coastal hotel/marina and infrastructure construction has filled in salt ponds, disfigured shorelines, and polluted nearshore waters with sewage (Pearce, 1989).  In highly developed islands like Balearics and Malta, tourism has been associated with the rapid decline of traditional pursuits and renewable resource uses, the rise of realty inflation (Beller and others, 1990), and paralyzing summer crowding and other sociocultural intrusions that threaten insular lifestyles and identity (Lanfant and others, 1995).  In developing Indian Ocean islands, the situation is similar.  Tourism along with unplanned urbanization is associated with sand mining, mangrove destruction and coastal pollution.  Mauritius and Seychelles are ranked second and third in the world in terms of endangered native plant species (UNEP, 1999a), and some beach-based resorts are under threat from sea level rise.

            The Pacific, in transition from subsistence to a cash economy, is undergoing substantial threats from commercial agriculture and fishing, logging and coastal tourist development.  In popular resort areas delicate mangroves have been harvested for construction material and reefs scarred by trampling and collecting by tourists (Lobban and Schefter, 1997).  Development on Guam has been compared to suburban Los Angeles, and even the Galapagos has allegedly been overrun by excessive visitation (Lindberg and Hawkins, 1996).  As a result of these forces of modernization, the region boasts the largest number of bird extinctions in the world, and seven times more endangered species than the Caribbean (UNEP, 1999a).

            Since tourism’s biocultural base is in decline across the island world, and because of the continued pressures from increased globalization expected for the future (UNEP, 2002), researchers have called for greener, lower-density tourism styles and begun to explore the causes of this policy failure.  A variety of structural and institutional factors have been suggested (McElroy, 2002): the disequilibrium between a large-scale consumption-based international tourist economy imposed upon a small island ecology; island policy makers’ preoccupation with raising visitor numbers instead of net expenditure; tourism’s asymmetrical dynamics whereby linear economic benefits are mismatched with non-linear socio-environmental costs; and the absence of a comprehensive measure of overall tourism impact, i.e. an early warning signal to broadly assess the approach of potentially dangerous socio-environmental thresholds.

(b) Scope

            This paper develops such an early warning signal, the so-called Tourism Penetration Index (TPI), and applies it to a cross-section of some 51 small islands.  Whereas most impact studies have employed separate, uni-dimensional measures of tourism impact on the economy, the society, the environment, the TPI integrates all three into a single measure.  The theoretical backdrop for interpreting the results is taken loosely from Butler’s (1980) tourism area life cycle model—a variant of the familiar product life cycle in marketing literature--whereby destinations over time pass through predictable stages of emergence, growth, maturity and decline.  Recent applications to the Caribbean (McElroy and de Albuquerque, 1998) and beyond (McElroy and Olazarri, 1997; McElroy, 2002) suggest the TPI is a useful first approximation of overall tourism impact.  The paper concludes with a summary of the planning challenges appropriate for each stage of tourist development, a discussion of the limitations of the index, and suggestions for further research.


The Tourism Penetration Index (TPI) was constructed in three steps.  First, the variables were selected to measure tourism development across the three impact dimensions: per capita visitor spending to measure economic impact, average daily visitor density to measure socio-cultural impact, and rooms per square kilometer of area to measure environmental impact.  Second, standardized indices based on these variables were calculated by taking the value of each variable for each destination, subtracting the minimum of that value for the whole sample, and then dividing the result by the sample maximum minus the sample minimum according to the formula: (X-Xmin)/(Xmax-Xmin).  Third, the overall TPI scores were calculated as the unweighted average of the three standardized impact indices.

To operationalize the index, a sample was selected of 51 small islands of roughly one million population or less for which complete data were available.  This data constraint excluded a number of small non-sovereign islands like Azores, Balearics, Faroes, Madeira, Mayotte, Wallis and Fortuna and others.  To ensure uniformity, all data were taken from standard sources: the tourism data from the Compendium of Tourism Statistics (WTO, 2001), and the population and area figures from The World Factbook (CIA, 2001).  The resulting sample includes 23 islands in the Caribbean, 16 in the Pacific, five in the Indian Ocean, four in the Atlantic, two in the Mediterranean (Malta and Cyprus) and Bahrain in the Persian Gulf.  Three have slightly more than one million inhabitants (Hawaii, Mauritius, and Trinidad), and all are less than 20,000 Km2 in area except Iceland and Solomons.


            Table 1 presents the basic data, and Table 2 records the three impact variables, their standardized indices and their combined TPI scores and destination ranking.  The overall TPI scores were calculated as a simple unweighted average of the three standardized indices.  This was based on the assumption that each type of separate impact--economic, social, environmental--was as important as the other two in contributing to overall tourism penetration.  The TPI scores yield results that broadly confirm what is expected.  The 51 islands are loosely ranked from most (St. Maarten) to least developed (Comoros).  The more traditional, developed, and accessible Caribbean, Mediterranean, and Northern Pacific destinations populate the top half of the rankings while the more isolated, and recently emerging South Pacific and Indian Ocean destinations dominate the bottom half.  The sample divides roughly into three distinct groups based on discrete levels of development as revealed by the TPI: most developed, intermediate, and least developed.

(Tables 1 and 2 here)

            The most developed islands form a subgroup of 13 internationally visible highly developed destinations characterized by average per capita visitor spending approaching $10,000 and an average daily visitor density over 170 tourists per 1,000 residents.  Tourists thus represent the rough equivalent of a 17 percent increase in the daily population.  Their insular landscapes are crowded on average with nearly 25 hotel rooms per km2 of area.  This group includes: six traditional Caribbean resorts (Aruba, British Virgins, Caymans, St. Maarten, Turks/Caicos, and US Virgins) plus Bermuda, three Northern Pacific resort islands (Guam, Marianas, Hawaii), Malta, and two small Dutch Antilles (Saba, St. Eustatius) known for their dive tourism.

            As a group these most developed destinations share a relatively unique profile.  According to the literature (McElroy and de Albuquerque, 1992), these mature, affluent areas advancing to the top of the resort cycle are characterized by high visitor and hotel room densities but relatively slow visitor and room growth rates.  Their market is by and large dominated by shorter-staying visitors (6.2 nights average) with a strong preference for hotels, large-scale (comfortable) facilities, and man-made attractions.  They also exhibit the highest levels of hotel occupancy, promotional spending, and (for the Caribbean) cruise passenger traffic.  As a partial indicator of their integration into the global tourist economy, they tend to display the lowest degree of seasonality through special year-round packages (honeymoon weekends, conventions, carnivals, regattas, etc…) They also tend to exhibit a relatively high degree of man-made attractions (casinos, golf courses, conventioneering etc.).  Many of these older established destinations are also among the most frequently cited in the literature for tourism-induced ecosystem damage, marine pollution, over-crowding, host tensions, and declining vacation quality (Jenner and Smith, 1993).

            The least developed islands contain 16 primarily Pacific and Indian Ocean islands located at the low end or beginning stage of the resort cycle.  For example, as a group they average $231 in per capita visitor spending, i.e. less than three percent of the most developed islands’ level.  Likewise, they average only 8 visitors per 1,000 population and roughly one room per km2 of land area.  They divide unevenly into two subgroups.  At the bottom are remote South Pacific outposts like the Solomons, Kiribati, Tuvalu, Vanuatu, Tonga, and Samoa and include the Marshalls, Cape Verde, Sao Tome/Principe, Comoros and Trinidad.  These are emerging destinations with cultures and ecosystems relatively intact.  At the higher end is a subgroup of islands with a couple of decades of successful tourism growth: Mauritius, Reunion, New Caledonia, Fiji, and Iceland.  They are moving toward the intermediate range of tourism impact.

            As a group, these destinations are characterized by relatively pristine natural and cultural amenities, small-scale facilities and infrastructure (some lack jetports), and limited visitor, hotel and population growth.  They tend to be large in both population size and area; and in terms of economic structure, they are the most dependent on agriculture and the least anchored to tourism.  They spend the least on promotion, have the lowest proportion of international (100+ rooms) hotels, the highest ratio of regional (inter-island) visitors, and their average length of visitor stay is the longest, 10 nights.  These islands have the best planning potential for developing ecotourism and other sustainable tourism styles based on low-density consumption of their unique natural and cultural assets.

            The intermediate destinations are the most dynamic and heterogeneous.  As a group their average TPI scores fall cleanly between the most and least developed.  For example, average per capita visitor spending is approximately $2,000, average daily density is 55 visitors per 1,000 population, and average room per km2 is six.  In most cases, these islands are characterized by very rapid visitor growth and hotel and infrastructure construction.  In contrast to the most developed destinations, they tend to have higher rates of seasonality and lower levels of promotional spending and cruise ship traffic.

            The 22 intermediate islands fall into three rough subgroups.  At the high end are six highly developed destinations with significant tourism experience that include five Caribbean resorts (Anguilla, Antigua, Bahamas, Barbados, Bonaire) and Cyprus.  Anguilla and Antigua may graduate to most developed status over the next two decades.  Bahamas, in fact, should be there already because of the concentration of high-density visitation in the Freeport-Nassau complex, but the intermediate TPI score results from the archipelago’s large land area and the low level of tourism development across the outer so-called “Family Islands.”

            In the middle are 12 destinations distinguished by their relatively diversified economies and steady tourism growth.  These include six Caribbean islands (Curacao, Grenada, Guadeloupe, Martinique, St. Kitts, St. Lucia), two Indian Ocean islands (Maldives and Seychelles), Cooks, French Polynesia, and Palau in the Pacific, and Bahrain.  Many of these islands are experiencing noticeable change and resource-use conflicts as labor and capital migrate from traditional pursuits to tourism.  Some are also experiencing the migration transition (immigration) to service the labor-intensive demands of expanding tourism.  However, the moderate rate of change affords opportunity for anticipatory planning.  In fact, Maldives and Seychelles are noted for long-range planning to control the pace of growth (Innskeep, 1994).

Finally, four islands occupy the bottom end of the intermediate scale.  They include two agriculturally diversified Caribbean destinations--Dominica and St. Vincent--that have recently graduated from the least developed group.  They also include tiny Niue in the Pacific and Montserrat.  A popular North American retirement haven since the 1960’s, Montserrat’s TPI ranking has declined because of a devastating volcanic eruption in 1995 that rendered over half of the island uninhabitable.


            Thus the TPI in broadbrush presents a global picture of tourist development in small islands across the world.  It provides policy-makers with an indirect early warning signal or assessment of roughly where each destination is positioned along the economic-environment continuum.  With Butler’s (1980) life cycle model as a backdrop, the TPI results also suggest some of the key planning challenges, at least in general terms, that surface along the tourism development cycle.

            For the most developed destinations, for example, the key task is to sustain vacation quality.  This will require at least three major policy directions: (1) restoring environmental damage and curbing further incursions into fragile areas; (2) managing visitor densities less intrusively by dispersal through time and space; (3) and expanding length of stay and visitor quality by developing smaller-scale specialty alternatives to mass tourism: heritage, scientific, nature, retirement, village and so on.  Bermuda represents such a success story (McElroy, 2001).  Serious consideration should also be given to raising attraction access fees, which both limit visitor numbers and secure funds for ecosystem maintenance (Lindberg, 1991).

            The key challenge facing many intermediate destinations is controlling the quantity and quality of growth.  During this phase of increasing integration with the global tourist economy, stage II islands must attempt to constrain the natural propensities of international air, hotel and cruise interests for large-scale facilities and high-volume visitation so that these growth imperatives do not exceed the insular economic (labor, utilities, etc.) and socio-environmental absorptive capacities.  This will require at least three major initiatives: (1) preventing further encroachment on renewable resource uses (agriculture, fisheries); (2) sequencing large developments in stages over long horizons; and (3) engaging residents not only in participatory decision-making, but also providing them with a stronger financial stake in the industry.  This last can be accomplished by tax and other incentives for small-scale, local labor-intensive enterprises and for local purchases by hoteliers/restaurateurs/developers.  The case of Seychelles represents a good illustration of such tourism localization (Shah, 2002).  Targeting inter-island regional tourists is also warranted since such visitors support smaller-scale local service suppliers and “tend to travel to more geographically dispersed areas of the destination country, thereby facilitating wider distribution of the income from tourism” (Sinclair and Voker, 1993: 213).

            For the least developed destinations, the key challenge is to establish international visibility.  Ideally, this requires a major community-wide planning effort to achieve three things: (1) to identify the islands’ unique assets/attractions, (2) to construct the transport and facility infrastructure for sustainably accessing these assets, and (3) to determine a destination identity compatible with the native natural and cultural “genius of the place.”  This is a formidable task, but fortunately these islands have ample policy room to maneuver because of their early position in the resort cycle.  They have sufficient time to develop a tourism style that is socially acceptable, environmentally compatible and economically viable, and there are a number of successful models of integrated planning available (for Maldives and Prince Edward Island, see Manning and Dougherty, 1999).


            This analysis applied the Tourism Penetration Index to 51 small islands across the world to indirectly assess tourism’s overall pressure on fragile insular societies and ecosystems.  It further identified the major planning challenges at each stage of the resort cycle: establishing visibility, controlling growth and sustaining quality.  As a first approximation, however, the TPI suffers from several limitations.  First, it does not measure geographic concentration, a particularly important dimension for islands where mass sunlust tourism is clustered along the seashore.  Likewise, it does not account for dualistic development especially in large archipelagic states like Bahamas.

            Second, it does not measure seasonal visitation like the excessive summer densities in Mediterranean destinations like the Balearics and Malta.  Third, it does not measure a destination’s long-term experience with tourism.  This omission may down-rank some long-standing traditional destinations like Barbados.  Fourth, as a land-based indicator (rooms per km2), the TPI may up-rank certain islands like the British Virgins that cater to dominantly sea-based yachting tourism.  To address these and other deficiencies, further research including developing seasonal and other measures is warranted to improve the TPI’s performance and reliability.

            Finally, another potentially promising avenue for further research concerns the influence of political status, i.e. the character of jurisdiction, on island tourism development.  Although non-sovereign jurisdictions make up 45 percent (23/51) of the total sample in this study, they are markedly over-represented among the most tourism developed and clearly under-represented among the least penetrated.  To illustrate, 12 of the 13 most developed destinations with the highest TPI scores are non-sovereign dependencies or states (Hawaii), while on two of the 16 least tourist-penetrated are dependencies (New Caledonia and Reunion).  Such evidence though impressionistic suggests that non-sovereign political status may confer particular advantages for tourism growth.  These could include geographic proximity to and ease of travel (no passports, same currency) from major mother country origin markets, ready access to investment capital and aid-financed transport and communications infrastructure, special tax and duty-free concessions for gift/liquor purchases as well as other favorable advantages that deserve further examination.




















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