City Marketing and its Impact over Urban Economies Elena Lidia Alexa1 Marius Alexa2

1. Introduction In the past years tourism has become the worlds fastest-growing economic sector, both in terms of turnover and employment opportunities and so, many medium and small sized cities started on opting for touristic activities in order to revive the local economy. In these circumstances, municipalities are no longer just passive administrative entities; they are forced to become proactive players in order to reinvent and to become more competitive. Due to globalization, the competition for investors, tourists, highly skilled human resources and inhabitants is no longer just with other cities located a few kilometers away, but with cities placed on the other part of the globe, offering similar services and attractions. In this new context, tourism begun to be an appealing activity with an important potential and, at the same time, a challenge for urban centers development, as they find themselves forced to redefine their identity, due to the industry decline, outmigration of jobs, pollution, and under the impact of the global economic crisis. The main indicators of the touristic activity in the urban area emphasize that cities have an important percentage in the overall touristic circulation. However, the future progress of this form of tourism is conditioned by the assimilation in the urban management process of marketing strategies meant to allow the development of touristic functions in the main urban localities and of touristic programmes designed to bring added value to the cultural attractions for large and small cities alike. Urban marketing comes, in this case, as a natural response to the requirements of the city to better answer the markets needs and to adjust to the dynamics of the tourist market. One of the most important question raising in this case concerns marketing accountability, due to the difficulty of

1
2

PhD Student, Alexandru Ioan Cuza University Iai, e-mail: lidia.alexa@yahoo.com PhD Student, Alexandru Ioan Cuza University Iai, e-mail: marius.alexa@arhipelago.com

measuring the economic impact of tourism, for it implies a sum of direct, indirect and induced effects over a region, or, in our case, a city. The present article aims to analyze the different urban marketing strategies used by urban centers interested in attracting important tourist flows and their economic impact over the city in the context of the European Capital of Culture Programme. Using a case study, the analysis aims to estimate the economic impact of the Programme on Sibiu, a Romanian city selected as European Capital of Culture in 2007 and the citys ability to further capitalize the competitive advantage gained through that programme.

2. Urban Tourism. General considerations According to the World Tourism Organization (UNWTO), tourism is firmly established as the number one industry in many countries and the fastest-growing economic sector in terms of foreign exchange earnings and job creation. Specialized literature does not provide a widely accepted definition for urban tourism. However, there are common elements among different authors regarding the concept of tourist, excursionist and the delimitation of the urban area. Thus, it is widely accepted that urban tourism refers both to the movement of tourists in cities or urban agglomerations of at least 20.000 people outside their main residence, under the condition of remaining at least one night at the destination and to the tourist travel for at least 24 hours in the urban area, provided that the minimum travel distance is at least 100 km3. World Tourism Organization considers that urban tourism refers to travels inside cities or areas with a high population density4. If until recently urban tourism was seen as a result of population mobility, for which the city was only a brief stopover on the way to the final destination, at present, due to significant tourism consumer behavioral changes and to extensive changes in the urban management, the city turned into a cultural center, a relaxing place where people shop, meet with friends and spend their free time

3 4

G. Cazes, Fr. Potier (1996), Le tourisme urbain, PUF, Paris, p. 10. UNWTO, Tourism 2020 Vision, Volume 7, Global Forecasts and Profiles of Market Segments, p. 103.

pleasantly. Therefore, one can say that urban tourism is not just a form of tourism, but an integral part, a traditional and distinctive feature of the urban life5. Urban tourism includes activities such as: Leisure tourism linked to the particular features of urban areas; Business tourism linked to the economic and social vitality of towns and cities; Cultural tourism linked to the cultural heritage and events located in urban areas; Conference tourism linked to the facilities available in and the image of towns and cities. A number of new trends are to be found, although to differing degrees, in most European cities. These trends show why cities need to combine high-quality tourist experience with sustainable development of the city and integrated urban marketing strategy in order to become more competitive and to attract more tourists. Main market trends, on the demand side6: Urban tourism accounts for 35 % of the international travel of Europeans with an annual average growth of 4 % over the last 10 years; According to the ETM (European Travel Monitor), urban tourism has a market share of 18% and is a growing travel preference among consumers; this is a Europe-wide trend which seems to be more noticeable than for other forms of tourism; Lengths of stay are short, although there has been a slight increase in recent years; Europeans are taking several holidays a year and are choosing urban tourism because they are increasingly familiar with and at home in cities; Europe increasingly seems to be a network of cities; Europeans are increasingly dividing up their holidays, offering further opportunities for brief stays that mix cultural interests, shopping, events and, more simply, travel abroad; The latter two developments coupled with socio-demographic changes (increased life expectancy, shorter working week, continued rise in disposable income) are providing a

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Frank, Howie (2003), Managing tourist destinations, Thomson Learning EMEA, p. 93. Towards quality urban tourism Integrated quality management (IQM) of urban tourist destinations, European Commission, Brussels, 2000.

much broader mix of visitor profiles (different generations, multilingualism, differing socioeconomic levels, etc.); Tourists are increasingly looking for flexibility and diversity and for a wide range of opportunities enabling them to put together a stay of a few days combining sporting and cultural activities, events, shopping, social activities and in some cases themed activities; Urban cultural tourism is a mass phenomenon resulting from the growing demand for cultural activities that are often concentrated in cities (exhibitions, museums, historic heritage and monuments, etc.); The proportion of package tours is increasing, making it indispensable to involve travel operators and agents in initiatives to develop tourism. Main market trends, on the supply side: The strategic choice of many towns, cities and regions looking to improve their economies has been to develop tourist products based on their historic or contemporary heritage: history, the monumental or industrial heritage, gastronomy, art, culture and popular traditions, events and attractions are all resources that can be customized to provide a wide range of tourist attractions; The wide availability of air transport and the improved quality of railways (high speed trains), coupled with major price reductions and almost permanent promotional offers, are among the driving forces behind the growth of urban tourism; Since towns and cities are less and less centers of industry, tourism is being seen as a key factor in their socioeconomic recovery and is often one of the priority strategies for their development and rehabilitation; Cities are increasingly being seen as products that complement neighboring more traditional tourist destinations, from which cultural or shopping trips may be offered as an added extra during a relaxing holiday on the beach, in the mountains or in the country;

Urban tourism is playing a growing role in local, regional and European development policies, whether from the point of view of regional development, the environment or employment; Urban tourism is undoubtedly becoming an important political issue requiring an ever greater involvement of the public authorities because of the economic and social issues involved and the high-level investment (often public) needed for infrastructure, facilities and training. This is being reflected in practice by attempts to make facilities as multifunctional as possible and by the appearance, throughout Europe, of: Conference centers linked to complexes of hotels offering a wide range of standards, with large rooms that can be adapted to host concerts, sports meetings or even commercial events (exhibitions, trade fairs), Vast leisure facilities in towns and cities or on their outskirts (leisure parks and theme parks, tropical swimming pools, etc.); In a context that has become extremely competitive, cities are working on strategies to differentiate their image and gain a foothold in the market; their communication policies are increasingly sophisticated and set out as far as possible a strong image of which their residents can be proud; Local officials are becoming aware that it is important to manage the tourism resulting from upgraded local assets. They are in particular trying to prevent town and city centers, where the tourism supply is traditionally concentrated, from becoming single-function areas that no longer reflect authentic urban life; Management of this type requires monitoring and follow-up tools and, in many cases, the assistance of the public authorities in coordinating activities and, in particular, integrating them into other urban functions; local authorities are also having to find ways of coping with local public opinion that is intolerant of the disturbances caused by a massive influx of tourists;

The approach that urban destinations are taking reflects the need for the overall rehabilitation of their environment and the need to find a balance, within a framework of sustainable development, between resource management, economic performance and social aspirations. The issues of accessibility and mobility can also be addressed in this way; In this competitive context, there is obviously a need for constantly improved skills and ongoing human resource training (visitor orientation, knowledge of languages, new information and communication technologies, etc.). In the past years the main indicators of the touristic activity in the urban areas emphasize that cities have an important percentage in the overall touristic circulation and a recent study conducted by the European Travel Commission suggested that almost 20% of tourists who visit a European city mention culture, in the broader sense of the term, as the main reason for their visit. In these circumstances, urban tourism becomes associated naturally with cultural tourism and cities are increasingly using cultural events to promote their image, encourage urban development and attract visitors and investments. That is why the European Capital of Culture Programme has become appealing for different cities as their only possibility to visibly transform their cultural infrastructure, to boost the local economy, to attract tourists and to improve their image. The specialized literature treats mainly the subject of culture, as a means of promoting the cities and less the aspects regarding the European Capital of Culture Programme and subsequent impact over the cities which implemented the programme.

3. Urban marketing. General considerations The extensive urbanization led to the endorsement of the urban marketing concept; after 1990 the term begun to be widely used because of the increased competition between cities eager to attract more tourists, inhabitants, potential investors, all these things leading to a better living standard. The globalization had a direct impact over the public sector which is now required to reinvent itself and to apply strategies and methods which were until now, distinctive for the private sector. More 6

experienced in this area, the United States and several Western European Countries applied urban marketing in their regional and local strategies and published their experiences as best practice models in order that other organizations use it too. Among the urban centers that have an adjusted urban marketing system are: New York, Paris, Barcelona, Vienna, Berlin, Amsterdam etc. Thus, in Corsicos opinion, urban marketing is the alignment of the urban politics to the requirements of the local economic stakeholders and to the hopes and expectations of those operating outside of it, in order to better promote the local economy 7. Another marketing specialist, Jan van der Meer, considers that urban marketing can be described as a set of activities directed to enhance the correlation between the urban functionalities offer and the demand from its inhabitants, local companies, tourists and other visitors8. The marketing literature focuses on underlining the importance of city development and constant promotion of its elements, the increased competitiveness being an indirect effect of the applied strategies. Urban marketing must be designed as a general principle focused on city development, thus, on problems regarding housing, jobs, communications, facilities, environment. It is also characterized by a planning process including all stages of task allocation, current situation, strengths and weaknesses analysis, definition of its own level of competitiveness and implementing, monitoring and evaluating the activities. All these must lead to a concurring vision over the city and tasks for all the stakeholders involved in the process. The development based on local potential, significant projects, joint activities and the enhanced image as a whole must represent the goal achieved through the urban marketing process 9. In essence, urban marketing implies: to project the adequate combination of community characteristics and services, to establish attractive incentives for current and potential buyers, to create and efficient and accessible products and services delivery system inside the city, to promote the citys values and the image, so that the potential buyers will be aware of the distinctive advantages of
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Corsico, F. (1994), Urban Marketing, a Tool for Cities and for Business Enterprises, a Condition for Property Development, a Challenge for Urban Planning, Urban Marketing in Europe - International Conference, Ave, G. and Corsico; f. (eds.), Torino Incontra, Torino. 8 Meer, van der Jan (1992), The role of urban marketing in the urban management, The European Institute for Urban Comparative Studies, Erasmus University, Rotterdam. 9 Koster, A. (1994), Urban Marketing A new Approach for Town Planning and a Chance for Reactivation of Sites in OldIndustrial Regions, Urban Marketing in Europe - International Conference, Ave, G. and Corsico; f. (eds.), Torino Incontra, Torino.

the place. Thus, the perception over the cities and their image in the collective mind has become an important active component in their economic success or failure of their development. A key element in urban marketing refers to the difficulty of defining the citys identity and values in a way that can be widely accepted and easily marketed for all target groups. The challenge is given by the need to create a common identity from values that are not always intangible and which represent the interests of different social and economic groups. City branding must determine how culture, history, economic growth, social development, infrastructure, architecture, landscape and environment, among other components, can be combined in an identity later to be sold 10. In this process, the decision makers role is crucial, and in order for the urban marketing to succeed, a long term vision, both from the marketing and management point of view, is needed 11. Economic development has always been a priority for cities, regions and states, but only in the last decade they decided to change the perspective, from a rather narrow point of view over economic progress, to a more widespread strategy aimed to attract new companies and to maintain the existing ones, to develop international trade and tourism and to bring new external investors 12. The states, regions and cities have transformed their circumstantial economic campaigns in complex marketing strategies aiming to create competitive markets, to guide potential buyers and to distribute communitys resources, thus it will respond to the needs and expectations of the expert consumers.

3.1. Urban marketing in the European Capital of Culture Programme context. Sibiu Case The cultural programme is the central element of nearly all European Capital of Culture, and represents on average 63% of the operational expenditure of European Capital of Culture Programme. The European Capital of Culture cultural programmes are unique due to their scale, duration, scope and the range of stakeholders and partners. No other large-scale cultural events are directly comparable to the European Capital of Culture, and hosting the event was an unprecedented

10 11

Zhang, Li, Simon, Zhao (2009), City branding and the Olympic effect: A case study of Beijing, Cities, 26, pp. 245254. dAngella, Francesca, Go, M., Frank (2009), Tale of two cities collaborative tourism marketing: Towards a theory of destination stakeholder assessment, Tourism Management, 30, pp. 429440. 12 Kotler, Philip, Haider, H., Donald, Rein, Irving (2001), Place marketing, Bucharest, Editura Teora.

experience for most cities 13. The results published on the official website confirm that under the Sibiu European Capital of Culture 2007 Programme were presented 337 projects, summing 2062 events a kaleidoscope of artistic styles and directions for the different tastes: from the theater and painting, music, film, dance, literature and architecture to contemporary art and gastronomy 14 The budgets spent by the authorizing officers for the entire cultural programme, published at the end of the event, counting all categories of cultural programmes, including special projects and manifestations, joint-programmes with Luxembourg, projects proposed by embassies and cultural centers of the European Union countries and associated projects sustained by the local public authorities are presented in the table below. Table 1 - Financing of the cultural programme in Sibiu 15 Sources of finance Ministry of Culture Sibiu Local Council (through the Radu Stanca Theatre and Culture House) County Council European Commission Sibiu 2007 Association TOTAL Additionally: Cultural operators contributions Support from the 3rd European Ecumenical Reunions' budget CULTURAL PROGRAMME TOTAL BUDGET Total (Euro) 4.137.000 8.200.000 450.000 1.400.000 7.500 14.071.211 Approx. 2.276.500 388.000 17.222.000

In addition to the financing of the cultural programme, a significant investment was also made in cultural and other infrastructure in Sibiu, much of it by the national government. Table 2- Infrastructure expenditure of Sibiu Infrastructure Tourism infrastructure Cultural infrastructure renovation Historical centre renovation Technical equipment (scenes/stages, lighting system, sounds system, projectors, etc) TOTAL
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Total (Euro) 117.046.574 15.426.184 4.062.479 896.768 137.432.005

Palmer/Rae Associates, European Cities and Capitals of Culture, Study Prepared for the European Commission, Brussels, 2004. 14 www.sibiu2007.ro, accessed February 9th, 2011. 15 Sergiu Nistor (2008): Sibiu, Capital Cultural European 2007, Ianuarie 2005 - Decembrie 2007, Raport Sintez

Communication and promotion is closely related to some of the key objectives established by the European Capital of Culture Programme, such as the enhancement of city image, attracting visitors to the city, or expanding the local audience for culture16. The 21 European Capitals of Culture spent in total over 105 million Euros on communication and promotion, in a range from just under 1 million to 14 million Euros, which represented between 7 and 24% of the total operating expenditure of the European Capital of Culture organization. However these figures should be treated with caution, as most European Capital of Culture benefited from significant additional promotional expenditure by tourist boards, media and travel sponsors, cultural institutions and other partners. The number of staff directly employed on communication and promotion varied from one to forty, however most European Capital of Culture contracted elements out to public or private organizations, with tourist boards and municipalities often assuming responsibility for tourism marketing. The most frequently used media by European Capital of Culture were print and broadcasting, while new technologies (internet, SMS) were comprehensively exploited by several recent European Capitals of Culture. Almost all used special events to promote the year, and a smaller number made significant efforts using merchandise as a communication tool. Sibiu was the first European Capital of Culture (ECOC) to be staged in one of the post-2004 EU accession Countries and even if it was a risky bet at first, due to lack of experience in managing large scale cultural projects, to insufficient funding, or the fact that Romania was just joining the European Union, in the end it proved to be a success story. The main aims of the event were17: Raising the international profile of Sibiu; Long term cultural development; Attracting international visitors; Enhancing feelings of pride and self-confidence;
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Palmer/Rae Associates,European Cities and Capitals of Culture, Study Prepared for the European Commission, Brussels, 2004. 17 Sibiu European Capital of Culture 2007 website, accessed January 29, 2011, http://www.sibiu2007.ro/en3/strategia.htm

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Growing and expanding the local audience for culture; Improving social cohesion and creating an economic downstream; Improving cultural and non cultural infrastructure; Developing relationships with other European cities/regions and promoting European cultural cooperation; Promoting creativity and innovation. In addition there were a number of specific aims in the area of communications and promotion: Raising the international profile of the city; Changing the image of the city; Increasing foreign and domestic tourism; Broadening audiences for culture; Improving the availability and dissemination of information about the programme is a major task, now under the process of construction. The key objectives for 2007 CCE Programme in terms of communications and promotion are: Raising the international profile of the city; Changing the image of the city; Increasing foreign and domestic tourism; Broadening audiences for culture; Improving the availability and dissemination of information about the programme is a major task, now under the process of construction. Sibiu 2007 CCE Programme has several communications priorities: Promoting the profile of the city; Promoting the brand/image of the Capital of Culture; Promoting the cultural programme of the Capital of Culture.

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Table 3 The target audiences of the communication strategies Citizens from Sibiu and Romania, a national audience estimated at 5-5.5 million persons, focusing on the mobile categories, interested in cultural events and cultural tourism; Citizens from EU and other European countries, from USA, Canada, Israel, accentuating the traditional areas generating tourist flows for Romania. The European targeted audience was estimated around 40-45 million people, focusing on the mobile categories, interested in cultural events and cultural tourism; Organizations of Romanians from abroad. Journalists and opinion-formers from Romania and abroad; Tourism operators; Business communities and lobby groups; European and international organizations (UE, Unesco, EC).

Audience 1 potential visitors

Audience 2 information multipliers

In order to better implement the programme the representatives of the local stakeholders from Sibiu decided to create an NGO which would be entrusted with the organization of Sibiu European Capital of Culture Programme: The Association Sibiu/Hermannstadt European Capital of Culture 2007. The Coordination Office Sibiu European Capital of Culture 2007 represented the Association's executive board and had the following responsibilities: General coordination for Sibiu 2007 Programme; Thorough look into the objectives and artistic concepts of the Cultural Programme; Selection of the projects in the preliminary stages; Coordination and consultation with the Luxembourgian partners; Implementation of the Cultural Programme; Implementation of the communication and marketing strategy; Administrative and financial management for the Programme. The Association has been the main stakeholder during the Sibiu 2007 Programme managing the marketing strategy alongside with the advertising company and the partners involved in the programme. When implementing a large scale project like this it is essential to have a clear and unique message communicated and so, the Association created the Visual Identity Guidelines which described the elements to be used by the different cultural partners in order to promote the visual

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identity of Sibiu 2007 Programme within the context of its own event and the rules and limitations for using these elements. The Sibiu 2007 Programme logo was the following18:

The slogan, City of Culture City of Cultures was meant to underline the main characteristic of the city which is multiculturalism. The motto: Sibiu - Young since 1191 emphasized the long cultural heritage of the city and also the modern context of its citizens evolution. The promotion campaign for Sibiu European Capital of Culture 2007 was carried out with the support of GAV Scholtz & Friends, the company which won the auction. The program was promoted both at national and international level using different instruments of promotional mix: TV and Internet campaign, PR campaign, outdoor campaign, radio spots, and presentation films. The main communication vehicle used during 2007 event was the Programme website: www.sibiu2007.ro which was in Romanian, English and German so both national and international tourists could find useful information. Table 4 - Budget for the Communication and Promotion Campaign for Sibiu European Capital of Culture19
Services and products Total campaign Total services, out of which: General communication strategy Creative concept Media fee European PR & Marketing Agency Fee Local PR & Marketing Agency Fee Media monitoring Information centre personnel training Overhead agency Total products, out of which: Spot radio 30"/RC 30" Spot TV 30"/TVC 30" Spot TV 2 Presentation clip 2min/ FP 2 min National and international media coverage: TV, radio
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Expenses Euro/Ron 1.596.498 Euro 571.003,29 61.642 94.021,41 49.922,88 99.013,71 39.522,28 55.247,39 33.281,92 93.369,68 5.176.391,16 16.640,96 331.296 116.695 124.950 1.289.670,24

Visual Identity Guidelines, Coordination Office for Sibiu European Capital of Culture 2007 Program Sergiu Nistor (2008): Sibiu, Capital Cultural European 2007, Ianuarie 2005 - Decembrie 2007, Raport Sintez

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PR & Marketing products - extern PR & Marketing products - local Web design (banner, interface, etc.) Street billboards campaign Badges

1.222.625,2 587.425,9 43.050,24 1.438.492,23 5.545,4

The outcomes of the campaign were20: Integrated communication campaign: TV (three spots, outdoor, PR campaign, radio campaign); International TV campaign: three international TV channels (EuroNews, Travel Channel, National Geographic), 1460 spots aired over a period of three months: 50 % to National Geographic, 30 % to EuroNews and 20 % to Travel Channel; more than 55 million people targeted in Great Britain, Austria, Belgium , Denmark, Finland, France, Germany, Ireland, Italy, Holland, Norway, Portugal, Spain, Switzerland, Bulgaria, Croatia; National TV campaign: four national TV stations (TVR 1, TVR 2, TVR Cultural, TVR Internaional), over 1600 spots aired, out of which 457 on TVR 1 and TVR 2, with an estimated target audience of 7 million people; Two outdoor campaigns (spring and summer-autumn) with over 3900 square meters of outdoor advertising displayed for 150 days in 48 central locations in Bucharest, Brasov, Targu Mures, Arad and Sibiu; Internet campaign with banners and pop-ups on three European websites for a period of 8 to 12 weeks: www.euronews.net, www.travelchannel.com, www.nationalgeographic.com. 2808 articles about Sibiu 2007 in the national press (October 2006 December 2007), an average of 8 articles per day; 2386 minutes in the news on national TV stations (January December 2007), an average of 7 minutes aired daily on national news programmes. 457 minutes of news on national radio stations (October 2006- December 2007);

20

Nistor, Sergiu, Sibiu, Capital Cultural European Raport sintez, Bucureti, Martie 2008

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The general attitude of the articles toward the programme: negative 5%, neutral 25%, positive 70%. Besides the contracts financed by The Ministry of Culture and implemented through GAV Scholz & Friends, Realitatea TV station signed a partnership with Sibiu CCE 2007 Association to promote the event. The partnership consisted in: Daily airing an one minute reports, in the evening news about Sibiu European Capital of Culture, named The number of the day in Sibiu; The show EU, Romania was dedicated, twice a month to Sibiu European Capital of Culture; Another series of materials on Sibiu European Capital of Culture were broadcasted once a week on Sunday in the afternoon news under the name Eurocapitala with an average duration of 8 minutes; Another series of materials labeled Sibiu week at the Money Channel were broadcasted during the daily show Todays agenda on The Money Channel TV Station. The Development strategy of Sibiu County for 2010-2013 mentions as a priority of the tourism sector the development and communication of Sibiu Brand. The strategy aims to capitalize the positive image acquired throughout the European Capital of Culture Programme 21.

4. Economic impact of tourism. General considerations Tourism has a variety of economic impacts. Tourists contribute to sales, profits, jobs, tax revenues, and income in an area. The most direct effects occur within the primary tourism sectors accommodation, restaurants, transportation, amusements, and retail trade. Through secondary effects, tourism affects most sectors of the economy. An economic impact analysis of tourism activity normally focuses on changes in sales, income, and employment in a region resulting from tourism activity22.

21

Strategia de dezvoltare a judeului Sibiu pentru perioada 2010 2013 i direciile de dezvoltare ale judeului pentru perioada 2014 2020, Sibiu, 2010 22 Daniel J. Stynes, Economic Impacts of Tourism

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Number of tourists

Tourists expenditure

The increase of the net use of accommodation capacity indices

New companies attracted in the region

Local businesses supply more goods and services

New jobs directly created

New jobs indirectly created

When employees spend their salaries, more jobs are created and more incomes for the national and local budget are assured, out of the payroll taxes.

The area becomes more attractive for tourists

The taxes are used for funding infrastructure rehabilitation, touristic services and image.

Figure 1 The benefic effects of Tourism Table 5 - The economic impact of tourism on Romanians Economy. Key Facts 201023: Gross Domestic Product (GDP) Growth The contribution of Travel & Tourism to Gross Domestic Product (GDP) is expected to rise from 5.1% (RON25.9bn or US$9,005.9mn) in 2010 to 6.4% (RON78.8bn or US$22,825.7mn) by 2020. Real GDP growth for the Travel & Tourism Economy is expected to be -5.4% in 2010 and to average 7.3% per annum over the coming 10 years The contribution of the Travel & Tourism Economy to employment is expected to rise from 6.1% of total employment, 519,000 jobs or 1 in every 16.3 jobs in 2010, to 7.7% of total employment, 670,000 jobs, or 1 in every 13.0 jobs by 2020. Export earnings from international visitors are expected to generate 2.4% of total exports (RON4.5bn or US$1,570.4mn) in 2010, growing (nominal terms) to RON16.3bn or US$4,729.4mn (2.6% of total) in 2020. Travel & Tourism investment is estimated at RON10.3bn, US$3,577.7mn or 7.4% of total investment in 2010. By 2020, this should reach RON38.4bn, US$11,126.2mn or 7.8% of total investment.

Employment

Visitor Exports

Investment

23

Travel and Tourism Economic Impact, World Travel & Tourism Council, Report on Romania, 2010.

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4.1. Economic impact of tourism in the context of European Capital of Culture It is rather difficult to separate the impacts of the European Capital of Culture Programme itself from the general growth in tourism supply in Sibiu, which would probably have shown some growth without the European Capital of Culture as well. However, looking at the pace of growth, it is clear that the period after 2007 has seen a substantial increase in the supply of hotels and other accommodation facilities.

Table 6 - The evolution of the accommodation capacity in Sibiu County 2005 2010 Accommodation capacity Year Number of units Accommodation capacity Newly classified structures 2006 273 4333 -421 2007 359 5710 1377 2008 449 7161 1451 2009 481 8085 924 2010 518 8983 898
Source: compilation between INSSE statistical data, Masterplan for Tourism in Sibiu County, Sibiu County Tourism Association Annual Report 2009

As we can see from the table above 2007 has been an important year in the touristic development of Sibiu, from the number of touristic units and accommodation capacity, point of view. The overall result has been a doubling of total accommodation supply since 2006 and a continuous positive trend. It is also relevant that several large commercial hotels development accommodation facilities mainly in Sibiu, but also in the surrounding area. The predicted increasing of tourists attracted many investments in hotel industry. The total amount spent for refreshing accommodation establishments was 60 million Euros 24. Many existing hotels were renovated and some of them were reclassified to an upper category. Due to the fact that many of the hotel projects related to the European Capital of Culture were not actually operational until 2007 or even in 2008, the biggest effects of hotel development were actually felt the year after the European Capital of Culture Programme. By 2009 Sibiu had an additional six four or five star hotels compared with 2006. This way, not only did tourism increase, but visitors also stayed in higher grade accommodation and therefore paid higher average room rates.

24

Smaranda Cosma, Adina Negrusa and Cristina Popovici, Impact of Sibiu European Capital of Culture 2007 event on country tourism, Proceedings of the 2nd WSEAS International Conference on CULTURAL HERITAGE and TOURISM.

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The economic impacts of tourism are typically estimated by some variation of the following simple formula: Economic Impact of Tourism = Number of Tourists * Average Spending per Visitor * Multiplier Multiplying the number of tourists by the average spending per visitor gives an estimate of total tourist spending in the area. Multipliers are only needed when determining the secondary effects of tourism spending25. In assessing the economic impact of the Sibiu European Cultural Capital Programme on the visitor economy, I have used the analysis of two of the three indicators, considering that the multipliers are still to be calculated for the Romanian economy: 1) The estimated number of additional visits created by the Sibiu European Cultural Capital Programme. 2) The estimated spend from these visits.

1) The estimated number of additional visits created by the Sibiu European Cultural Capital Programme The tourism statistics show a clear boost both in terms of arrivals and overnights during the European Capital of Culture Programme in 2007. The fact that, starting with the following year, the number of tourists decreases is rather normal considering the global economic crisis, which had an important impact over the touristic activity. However, we need to take into consideration the fact that the decline was framed in the general national trends and that almost a third of overnight visitors stated that they stayed with friends and relatives when visiting Sibiu in 2007, so the decrease showed by the official statistics may not be entirely accurate. Table 7 - Tourist arrivals and overnights in Sibiu County 2006-201026 Year Arrivals Overnights Difference in (thousands) (thousands) arrivals (%) 2006 252.7 434.5 2007 327.9 530.1 29.75 2008 287.1 459.3 -12.48 2009 240.1 375.9 -16.37
25 26

Difference in overnights (%) 22.00 -13.35 -18.15

Daniel J. Stynes, Economic Impact of Tourism, 1999. www.sibiu.insse.ro, National Institute of Statistics, Sibiu County Department, accessed January 29, 2010..

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2010*

196.1 345.6 *statistics available until November 2010

Table 8 - Tourist arrivals and overnights in Sibiu City 2006-200927 Year Arrivals Overnights Difference in (thousands) (thousands) arrivals (%) 2006 150 235 2007 178.5 280.9 19.00 2008 147 204 -17.65 2009 120.3 164.2 -18.16

Difference in overnights(%) 19.53 -27.38 -19.51

Table 9 - Total spending by visitors staying in Sibiu City according to official statistics, 2007-200928 Year Overnights Spend per Total spend (thousands) night (million Euro) 2007 280.9 91 25.6 2008 204 85 17.3 2009 164.3 130 21.4 The spending habit of the tourists modified in 2009, partially because some of the investments in touristic infrastructure become operational in 2008 and in 2009, so the tourists could opt for better accommodation which is also more expensive. In a survey conducted in 2009, the respondents were asked if they had prior visited Sibiu in 2007 during the European Capital of Culture Programme. In 2008, 50% of the tourists declared that they have visited Sibiu in 2007 and in 2009, 74% stated that this is their second visit since 2007. The high percentages show the positive impact of the European Capital of Culture Programme on tourists visiting habits and the fact that the investment in touristic infrastructure and marketing was constructive. Considering the percentage of people who stated that they have prior visited Sibiu during the European Capital of Culture Programme, we can presume that the positive experience of the prior visit was the main reason for visit in 2008 and in 2009. Table 10 - Number of visitors motivated by the European Capital of Culture Programme: Year Arrivals Overnights (thousands) (thousands) 2008 2009
27

73.5 60.15

150.96 121.508

Richards, Greg and Rotariu, Ilie, The Impact of the 2007 European Cultural Capital in Sibiu: A long term perspective, Sibiu, Editura Universitii Lucian Blaga din Sibiu, 2010, p. 39. 28 Richards, Greg and Rotariu, Ilie, The Impact of the 2007 European Cultural Capital in Sibiu: A long term perspective, Sibiu, Editura Universitii Lucian Blaga din Sibiu, 2010, p. 40.

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2) The estimated spend from these visits The research conducted in 2009 determined the spending habits of the tourists visiting Sibiu in order to better establish the direct economic impact on the local economy. The figures on average visitor spending show that spend levels have increased since 2007. The average visitor to Sibiu now spends almost twice as much as the average visitor before 2007 29.

Figure 2 - Average total visitor spend 2001-2009 Total average visitor expenditure increased very little between 2007 and 2009. This is basically because the European Capital of Culture Programme attracted a relatively high number of foreign travelers and other high spending tourists. However, the average daily spend has increased significantly since 2007, largely as a result of a shift in spending patterns.

Figure 3 - Average spend per day (Euros) 2007 and 2009

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Richards, Greg and Rotariu, Ilie, The Impact of the 2007 European Cultural Capital in Sibiu: A long term perspective, Sibiu, Editura Universitii Lucian Blaga din Sibiu, 2010, p.36.

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Figure 4 - Visitor spend by category 2007 (excludes Sibiu residents) The tourist spend by category show that accommodation expenses represent the most important sum in the tourists budget which also explains the fact that the operators declaring the biggest boost in revenues were hotel and pension owners: 95% of them stated that the European Capital of Culture Programme had a significant and high impact over their finances 30. From the tourist operators point of view, the results of the survey revealed that they have registered the highest increases in turnover in 2007 compared with 2006 - 13.7%, transporters with 10.9% and restaurants / bars with 7.9%.

Figure 5 - Visitor spend by category 2009 (excludes Sibiu residents)

30

The Study and Research Centre for Tourism, The Impact of the Sibiu 2007 Programme on Companies from Sibiu Area, Sibiu, 2008, p.7.

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In 2009 the survey shows less spending on travel which confirms the increased level of domestic tourism, as a consequence of the economic crisis which compels tourists to travel closer to their home location. 5. Conclusions In the end we can state that the Sibiu - European Capital of Culture Programme had two types of economic benefits: Quantifiable economic benefits:

The significant impact on accommodation development both in terms of quantity and quality, not only in the city itself but also in the surrounding area: a 31% increase in number of accommodation units in 2007 compared to 2006 and 25% increase in 2008 compared to 2007, the same enhance percentage pertains to the accommodation capacity.
The considerable increase of the tourists indicators, in 2007 compared to 2006, both in terms of arrivals and overnights: 29.75% boost in arrivals in 2007 and 22% increase in overnights for Sibiu County. The increase for Sibiu City was of 19%. The positive trend of tourists visiting Sibiu recurrently, after attending the European Capital of Culture Programme: 50% of those visiting in 2008 and 74% of those from 2009; The increase in the total average visit spend, which has an important direct impact on tourist operators: almost a 90% increase in 2007 compared to 2004; The changes registered in the expenditures made by tourists: less spending on travel and more on accommodation, shopping and admission: which ensure higher incomes for the local tourist operators on products and services locally produces. Non-quantifiable economic benefits: Enhancing the image of the city and increasing Sibiu visibility as an appealing tourism destination;

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The investments made in the public infrastructure increased the competitiveness level of the city; The success of the programme enhanced the social cohesion within Sibiu and raised attractiveness for potential inhabitants better skilled and qualified; The increase of the housing and land value in the area as an impact of the improved touristic attractiveness; Changes in the quality and quantity of goods and services the increased tourism demand can lead to a wider array of goods and services available in Sibiu area.

6. References Corsico, F. (1994), Urban Marketing, a Tool for Cities and for Business Enterprises, a Condition for Property Development, a Challenge for Urban Planning, Urban Marketing in Europe International Conference, Ave, G. and Corsico; f. (eds.), Torino Incontra, Torino. Cosma, Smaranda, Negrusa, Adina, Popovici, Cristina, Impact of Sibiu European Capital of Culture 2007 event on country tourism, Proceedings of the 2nd WSEAS International Conference on CULTURAL HERITAGE and TOURISM. dAngella, Francesca, Go, M., Frank (2009), Tale of two cities collaborative tourism marketing: Towards a theory of destination stakeholder assessment, Tourism Management, 30. Frank, Howie (2003), Managing tourist destinations, Thomson Learning EMEA. G. Cazes, Fr. Potier (1996), Le tourisme urbain, PUF, Paris. Koster, A. (1994), Urban Marketing A new Approach for Town Planning and a Chance for Reactivation of Sites in Old-Industrial Regions, Urban Marketing in Europe - International Conference, Ave, G. and Corsico; f. (eds.), Torino Incontra, Torino Kotler, Philip, Haider, H., Donald, Rein, Irving (2001), Place marketing, Ed. Teora, Bucharest. Meer, van der Jan (1992), The role of urban marketing in the urban management, The European Institute for Urban Comparative Studies, Erasmus University, Rotterdam.

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National Institute of Statistics, Sibiu County Department, www.sibiu.insse.ro, accessed January 29, 2010. Nistor, Sergiu (2008): Sibiu, Capital Cultural European 2007, Ianuarie 2005 - Decembrie 2007, Raport Sintez. Palmer/Rae Associates (2004), European Cities and Capitals of Culture, Study Prepared for the European Commission, Brussels. Richards, Greg, Rotariu, Ilie (2010), The Impact of the 2007 European Cultural Capital in Sibiu: A long term perspective, Ed. Universitii Lucian Blaga din Sibiu, Sibiu. The Study and Research Centre for Tourism (2008), The Impact of the Sibiu 2007 Programme on Companies from Sibiu Area, Sibiu. European Commission (2000), Towards quality urban tourism Integrated quality management (IQM) of urban tourist destinations, Brussels.

World Travel & Tourism Council (2010), Travel and Tourism Economic Impact, Report on Romania.
UNWTO, Tourism 2020 Vision, Volume 7, Global Forecasts and Profiles of Market Segments. Zhang, Li, Simon, Zhao (2009), City branding and the Olympic effect: A case study of Beijing, Cities, 26, pp. 245254. Sibiu, European Capital of Culture 2007 website, accessed January 29, 2011, http://www.sibiu2007.ro/en3/strategia.htm

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