Combating vacancy with tourism: the influence of tourism on retail in European cities

The Netherlands and Belgium are not the only countries where e-commerce has a big impact on retail. Online shopping is increasing across Europe, taking more and more of the physical retail’s share of purchases.

The results of this increase in online shopping are rising numbers of vacant retail lots. It is not so bad in the Netherlands, where the vacancy rate is just below 7%. In Belgium, on the other hand, the vacancy rate is almost 11%, whereas Great Britain faces a vacancy rate of more than 11%.[1]

Tourism pushes back on vacancy

Most of the larger European cities, however, are spared of high vacancy rates. There are multiple explanations for this, but certainly one of the most important ones is tourism. Many European cities welcome millions of tourists in their hotels, B&Bs, and hostels every year, and all these visitors will buy and consume within the city during their stay. That gives the retail sector a serious push. Apart from a few exceptions, cities where many tourists are staying overnight boast low vacancy rates.

The dark side of tourism

Lots of tourists is not just good news for large cities. Tourist shops can demand much higher profit margins of their customers, and are therefore able to pay much higher rents. Thus, higher numbers of tourists and the accompanying tourist facilities can push out vital services for local inhabitants. Furthermore, there is an ever-present threat of the creation of a monoculture of fastfood restaurants and souvenir shops.

The research of Roland Berger shows that certain cities are suffering from ‘over-tourism’, where the number of tourists is higher than the number of permanent inhabitants, and where these tourists are not contributing enough to the local economy.

Good examples of ‘over-tourism’ are Bruges and Prague. These cities are starting to look more like kitschy open-air museums than well-functioning cities. There is a danger that cities like Amsterdam, Barcelona, Dublin, Copenhagen, and Lisbon are – without proper management – also well on their way to become ‘over-touristed’.

On the other side of the spectrum are the cities that have a healthy number of tourists now, but may benefit from more visitors. Examples of this are Antwerp, Brussels, Gent, Utrecht, Helsinki, and Bilbao.

In conclusion, tourism can be a blessing for cities, and push down on retail vacancy. If a city becomes too popular, however, the arrival of so many tourists may later be regretted.

[1] Source LDC

Gertjan Slob

Gertjan Slob is the Director of Research at Locatus. He is responsible for the entire data course. During his work, he is constantly analysing data, and frequently flags interesting trends and developments.

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