More means Worse – Asymmetric Information, Spatial Displacement and Sustainable Heritage Tourism

This paper analyses the market transformations in heritage tourism destinations when excessive tourism demand determines the emergence of a class of excursionists among visitors. Building on the approach of Keane (1997) and Shapiro (1983), our model highlights some important dimensions of sustainable tourism development. The lesser capacity of excursionists to learn the true quality of the tourist goods increases the convenience for producers to cut back on quality. To continue to serve high quality goods and keep up the reputation of the destination as demand continues to grow, producers need to gain a mark-up on price that might not be sustained in a competitive market. Hence the decline in “high-paying” demand segments which are increasingly susbstituted by visitors with lesser quality expectations. In the end, the dynamics explained with this approach are consistent with – and represent an economic reinterpretation of – the class of evolutionary models known as “destination life cycle”, when they are applied to heritage cities. The regulator achieves a sustainable growth if it could enforce quality or information standards. However, the process should be managed at a spatial level that is rarely matched by formal administrative competencies. Traditional tourism strategies are seldom successful when they try to prevent excessive growth by discouraging daily visits. This model helps to identify alternative and more appropriate policy instruments.