European Household Expenditure on Leisure Time Activities Výdavky európskych domácností na voľnočasové aktivity

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1 Folia Turistica 4. Banská Bystrica : UMB Ekonomická fakulta, Recenzované/Review: European Household Expenditure on Leisure Time Activities Výdavky európskych domácností na voľnočasové aktivity Marlena Piekut, Magdalena Kludacz In Europe, consumer expenditure on leisure time activities is continuing to increase. Increasing average human lifespan and improving financial situation of many households increase the leisure time of people. The purpose of this paper is to analyze the household expenditure on selected goods and services connected with tourism. The research includes the measurement of the main categories of tourism expenditure, such as trips, restaurants and hotels, recreation and culture in the households from 30 European countries. The attention is focused on the share of various categories of tourism expenditure in the household budgets and their dynamics in the years Key words: European households. Culture and recreation. Hotels and restaurants. Services. Consumption. Výdavky európskych domácností na voľnočasové aktivity neustále rastú v dôsledku zvyšujúcej sa priemernej dĺžky života a zlepšujúcej sa finančnej situácie mnohých domácností. Stať analyzuje výdavky domácností na vybrané tovary a služby súvisiace s cestovným ruchom. Merania výdavky na dovolenkové aktivity, ubytovanie, stravovanie, voľný čas a kultúru v 30 európskych krajinách. Pozornosť venuje najmä podielu jednotlivých druhov výdavkov na celkových výdavkoch domácností na cestovný ruch a dynamike ich vývoja v rokoch 1995 až Kľúčové slová: Európske domácnosti. Hotely a reštaurácie. Kultúra a voľný čas. Služby. Spotreba. 451

2 Introduction The consumption is a concept which has multiple definitions in the literature. For instance the consumption can be defined as the processes by which consumer goods and services are created, bought and used (McCracken, 1988). Another definition says that the consumption is a process through which economic resources, goods and services are used up in order to satisfy human needs (Campbell, 1987). One of such needs is the utilisation of leisure time. This need materially affects the level and quality of human life, allows keeping a good psychophysical condition of the human body and helps in self-realization. Socio-economic development and enrichment of societies are directly connected with an increased interest in services associated with leisure time utilization. The leisure time should be treated as a form of investment in the development of personality. The process of satisfying many needs occurs through household. The household budget is divided in order to satisfy the needs of all family members. A larger household expenditure on leisure time activities could have a positive impact on economic growth. Development of tourist services generates income of enterprises, increases the sales of goods and services and has a positive impact on the labour market, as well as on trade balance and public revenues. 1. Objective, material and methods The aim of this paper is to analyze the household expenditure on selected goods and services connected with tourism. The research includes the measurement of the main categories of tourism expenditure, such us: restaurants and hotels, package holidays, recreation and culture in the households from 30 European countries. The research material is based on the statistical data extracted from Eurostat databases. The average rate of change was calculated to illustrate the growth dynamics of various categories of tourism expenditure. In the first step, chain index ä1ň was calculated for each year: i = y n /y n-1 (1) i chain index, where y n analysed period; the current year, for which the index it is calculated and y n-1 base period; the year preceding the current year. The chain indexes are designed to measure the magnitude of economic changes over time. Then, on the base of chain indexes, the average rate of change (2) was calculated: 452

3 = - G n n-1 n-1 n n 1- i n-1 i i... i = n 1 i 1 (2) where i G is average rate of change. The relationships between variables were identified using Pearson's correlation coefficient. It is a measure of the linear correlation (dependence) between two variables giving a value from the interval <-1;1>. The Pearson correlation has a value of 1 in the case of a perfect direct (increasing) linear relationship (correlation), and the value 1 in the case of a perfect decreasing (inverse) linear relationship (anticorrelation) and 0 in the case of no linear relationship. The value of Pearson's correlation coefficient indicates the degree of linear dependence between the variables. The weaker the relationship between the variables, the closer the coefficient is to 0. (3) where: x i, y i the values of the variables X i Y for i observation (i=1,2,...,n); n number of observations; x _, y _ - arithmetic mean of the observed values of each variable. The statistical analysis was carried out using the Excel (Microsoft) and Statistica 10 (StatSoft Inc.) software. 2. Results and discussion The highest share of expenditure on recreation and culture in the total expenditure of households was recorded in Norway, Finland, Sweden, Denmark, Iceland, Malta, the UK and Austria. In 2012, this share was there at least 10.5 % of total households expenditure. The lowest share of expenditure on recreation and culture was noted in Greece and Romania - less than 6 % of the total expenditure (Figure 1). The largest positive average rate of change with respect to the level of expenditure on recreation and culture in the period was recorded in Latvia and Lithuania (the average annual increase in spending was 14.4 %) and in Slovakia (11.0 %). In the same period Iceland recorded a negative rate of change -2.4 %. It was noticed that this decrease was mainly caused by a decline in the level of expenditure on recreation and culture during the financial and economic crisis in

4 Figure 1 The share of European households expenditure on recreation and culture in the total expenditure and the average rate of change of these expenditures in the period Source: Own work based on data from Eurostat, Household expenditure on recreation and culture includes purchases of package holidays. The highest share in this category was reported in Iceland (2.7 % of total expenditure), Czech Republic (1.8 %) and the Netherlands (1.7 %) and Slovakia and Luxembourg (1.6 %). In the years we also observe a stabilization of spending on package holidays in many countries including France, Italy, the Netherlands, Austria, Slovenia, Finland, and Iceland. The highest positive rate of change in the share of spending on package holidays was observed in Romania (11.6 %) and in Estonia (7.2 %). The highest negative rate of change was recorded in Poland (-6.7 %), Germany (-5.0 %) and Malta (- 4.6 %). The highest share of expenditure on restaurants and hotels in 2012, was reported in Malta, Spain, Cyprus ( % of total households expenditure). The lowest share of these expenses was recorded in Lithuania and Poland - less than 3 % of total household s expenditure. The highest positive rate of change in the share of spending on hotels and restaurants was observed in Latvia (9.6 %) and in Estonia (7.9 %). The relatively high positive rates of change were noted for Lithuania, Poland, Slovakia, Bulgaria, Hungary and the Czech Republic (5.9 %) (Figure 2). 454

5 Figure 2 The share of European households expenditure on hotels and restaurants in the total expenditure and the average rate of change of these expenditures in the period Source: Own work based on data from Eurostat, The system transformation has brought about many changes in households, especially in the area of work and leisure time activities. Especially the need for pleasure, entertainment and fun is strongly stimulated (Bell, 1988). Because of the dynamic development of civilization, which is a consequence of progressive technological and scientific revolution, the role of leisure time will be constantly increasing. (Puciato, Szczebak 2011, Pacian, Pacian, Staniak 2012, Walczak, Puliński, 2012). This trend is confirmed by the average rate of change calculated for leisure time services that is positive for the most of the countries. Generally the North and West European countries have reached the higher level of leisure time expenditure compared to the East European countries. These countries incur higher consumption expenditure with their better structure at the same time (less spending on basic goods and more on services) (Piekut 2013). On the other hand the households from East European countries allocate significant part of their budgets on their basic needs, such as food and home maintenance. According to the analyses of the expenditure in Spanish households (Alegre, Mateo, Pou 2010) there are budget restrictions on tourism expenditure that are the result of low levels of income and other household characteristics both financial (ability to save money, the number of unemployed household members) and non-financial (education level of household members, their age and health status). The other studies (Hung, Shang, Wang, 2012), beside the income and age of household members, indicate also the other fac- 455

6 tors affecting consumer behavior in the area of leisure time activities, such as possession of car and internet access. The tourism sector needs to adapt services to different types of households and to the process of changes occurring in their structure (e.g. social changes in postindustrialized societies) (Tangeland, Aas 2011). In the next stage of the research we conducted correlation analysis to evaluate the relationship between expenditure on recreation and cultural services, as well as on hospitality and restaurant services and socioeconomic variables characterizing European countries. The share of people who have never used the internet and the share of food expenditure in household budgets are the variables that are most strongly correlated with the expenditure on recreation and hotel services. Moreover it is a negative correlation. For instance the lower share of people who have never used the internet in the population is associated with the higher share of expenditure on recreation and culture in the total expenditure. On the other hand, the correlation between GDP per capita and expenditure on recreation and cultural services is positive. The growth of GDP per capita is associated with the higher spending on recreation and cultural services. The strongest positive correlation is between the expenditure on services as % of GDP and expenditure on hotels and restaurants. The coefficient of indicates that high ratio of the expenditure on services as % of GDP immediately results in growing share of expenditure on hotels and restaurants. In contrast, the lower share of food expenditure in total households expenditure is associated with the higher share of expenditure on hotel and restaurants in the total expenditure (Table 1). Table 1 The correlation coefficients between expenditure in households and socio-economic variables describing the European countries Variables Expenditure on Recreation and culture Hotels and restaurants GDP per capita The share of people with higher education in % The share of people who have never used the internet in % The share of food expenditure in household budgets in % Actual individual consumption in GDP in % Expenditure on services as % of GDP Source: Own work based on data from Eurostat, While most of the studies are focused on the effect of income on international tourism expenditures, the interesting study by Wang examined the relationships between GDP per capita and international tourism expenditures by types of savings regimes. These findings established an accurate understanding of the effects of savings on international tourism expendi- 456

7 ture. The results showed that the impact of income on tourism spending can vary under various savings regimes. In a low savings regime the effect of an increase in the GDP per capita is stronger related to international tourism expenditure. In a high-savings regime, there is strong motivation for precautionary savings that displace the tourism expenditure because the tourism is considered as a luxury good. Although international tourism expenditure also increase with GDP per capita, they do so at a slower rate (Wang 2014). It was also pointed out in the literature (Hung, Shang Wang, 2012) that regional factors, such as the structure of industry and household income have a direct impact on the modeling of tourism spending. Conclusion In the countries of Western and Northern Europe is observed a relatively higher share of expenditure on recreation and cultural services compared to the countries of the former Eastern Bloc. The global trends in consumption and the widespread enrichment of societies empower to the conclusion that the share of expenditure on the leisure time services will increase in the households of Eastern European countries and existing differences between West and East Europe will gradually disappear. Longer and longer life expectancy will result in an increase in leisure time, and people will strive for its optimal use. Currently the important factor having a significant impact on consumer behaviour is internet access, therefore the entrepreneurs operating in the area of services should properly shape their image. Social networking sites give the ability to know the opinion of the other consumers about the services offered by businesses. They also offer the possibility to obtain different types of information and to communicate freely. The satisfied customers can encourage the next ones to buy the services of the company. References [1] ALEGRE, J., MATEO, S., POU, L An analysis of households' appraisal of their budget constraints for potential participation in tourism. In Tourism Management, 31, 2010, (1), pp [2] BELL, D Kulturowe sprzeczności kapitalizmu. Warszawa : PWN, [3] CAMBELL, C The romantic ethic and spirit of modern consumption. Oxford : BasilBlackwell, [4] HUNG, W. T., SHANG, J. K., WANG, F. C A multilevel analysis on the determinants of household tourism expenditure. In Current Issues in Tourism, 2012, pp [5] McCRACKEN, G Culture and consumption. Bloomington, IL : Indiana Press,

8 [6] PACIAN, A., PACIAN, J., STANIAK, J Aktywność fizyczna osób starszych. In Jakość życia przewlekle chorych : poradnik dla pacjentów i opiekunów. Red. nauk. Zboina B. Ostrowiec Świętokrzyski, Stowarzyszenie Uniwersytet Trzeciego Wieku, Pp. s [7] PIEKUT, M Konsumpcja w polskich gospodarstwach domowych na tle krajów europejskich. In Problemy Zarządzania, vol. 11, 2013, 1 (40), pp [8] PUCIATO, D., SZCZEBAK, T Wybrane aspekty zagospodarowywania czasu wolnego u młodzieży z różnych środowisk. In Zeszyty Naukowe Małopolskiej Wyższej Szkoły Ekonomicznej w Tarnowie, 2013, T. 18, 2. [9] TANGELAND, T., AAS, Ø Household composition and the importance of experience attributes of nature based tourism activity products A Norwegian case study of outdoor recreationists. In Tourism Management, 32, 2011, (4), pp [10] WANG, Y. S Effects of budgetary constraints on international tourism expenditures. In Tourism Management, 41, pp [11] WALCZAK R., PULIŃSKI W Gospodarstwa ekologiczne w świetle badań w subregionie płockim w In Funkcje szkół wyższych a rozwój regionów Red. Kludacz M. Warszawa : Oficyna Wydawnicza Politechniki Warszawskiej, pp