Scholarly article on topic 'Local Economic Benefit in Shopping and Transportation: A study on Tourists’ Expenditure in Melaka, Malaysia'

Local Economic Benefit in Shopping and Transportation: A study on Tourists’ Expenditure in Melaka, Malaysia Academic research paper on "Economics and business"

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Abstract of research paper on Economics and business, author of scientific article — Syakir Amir, Mariana Mohamed Osman, Syahriah Bachok, Mansor Ibrahim

Abstract This study investigated the tourists’ expenditure pattern in Melaka city and its contribution to the local economy. Chi-square Automatic Interaction Detection (CHAID) was chosen to model the interaction for domestic and inbound tourists in transportation and shopping sectors and subsequently identify the local economic benefits. Results revealed that the tourists exhibited low expenditure levels (RM18.50 and below) in the transportation sector, contributing less benefits to the local economy as most tourists chose to walk. The tourists also demonstrated low levels of expenditure (RM75 and below) in the shopping sector, but contributed to the local economy by shopping in Jonker Street.

Academic research paper on topic "Local Economic Benefit in Shopping and Transportation: A study on Tourists’ Expenditure in Melaka, Malaysia"

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Procedia - Social and Behavioral Sciences 222 (2016) 374 - 381

ASEAN-Turkey ASLI Conferences on Quality of Life 2015 AcE-Bs ver. 2: AicQoL2015Jakarta AMER International Conference on Quality of Life Millenium Hotel, Sireh, Jakarta, Indonesia, 25-27 April 2015

"Quality of Life in the Built & Natural Environment 3 "

Local Economic Benefit in Shopping and Transportation: A study on tourists' expenditure in Melaka, Malaysia

Syakir Amir , Mariana Mohamed Osman, Syahriah Bachok, Mansor Ibrahim

aDepartment of Urban and Regional Planning, International Islamic University Malaysia, Kuala Lumpur, Malaysia


This study investigated the tourists' expenditure pattern in Melaka city and its contribution to the local economy. Chi-square Automatic Interaction Detection (CHAID) was chosen to model the interaction for domestic and inbound tourists in transportation and shopping sectors and subsequently identify the local economic benefits. Results revealed that the tourists exhibited low expenditure levels (RM18.50 and below) in the transportation sector, contributing less benefits to the local economy as most tourists chose to walk. The tourists also demonstrated low levels of expenditure (RM75 and below) in the shopping sector, but contributed to the local economy by shopping in Jonker Street. © 2016 The Authors.PublishedbyElsevier Ltd. Thisis an open accessarticle under theCC BY-NC-ND license (http://creativecommons.Org/licenses/by-nc-nd/4.0/).

Peer-review under responsibility of AMER (Association of Malaysian Environment-Behaviour Researchers) and cE-Bs (Centre for Environment- Behaviour Studies, Faculty of Architecture, Planning & Surveying, Universiti Teknologi MARA, Malaysia. Keyword: Tourists expenditure; local economic; transportation; shopping

1. Introduction

In modern society, the tourism industry has gained prominence due to economic growth (Brida et al., 2010), and has successfully become the leading economic engine for most of the regions in the world (Brida & Risson, 2009; Tang & Tan, 2013), hence providing a major source of revenue, employment, exports and taxation (Su & Lin, 2014). The concept of sustainable development has been widely debated in most fields, especially in the tourism sector, because such development provides supply of goods for tourists (Lepp, 2007; Shretha et al., 2007; Lee, 2009), opportunities for the stakeholders (Mehmetoglu,

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1877-0428 © 2016 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license (http://creativecommons.Org/licenses/by-nc-nd/4.0/).

Peer-review under responsibility of AMER (Association of Malaysian Environment-Behaviour Researchers) and cE-Bs (Centre for Environment- Behaviour Studies, Faculty of Architecture, Planning & Surveying, Universiti Teknologi MARA, Malaysia. doi : 10.1016/j .sbspro. 2016.05. 186

2001; Gursoy et al., 2002), preservation of the physical assets of the host destination (Gursoy and Rutherford, 2004; Nunkoo and Ramkissoon, 2011), as well as improvement of the quality of life within the local community (Eagles et al., 2002; Wang et al., 2010). There have been a number of research discussing the quality of life in relation to sustainable tourism in various aspects, namely economic well-being (e.g. Weaver and Lawton, 2001; Tosun, 2002; Manyara and Jones, 2007; Simpson, 2008), social well-being (e.g. Ahmaed and Krohn, 1992; Morais, and Dowler, 2006; Lee et al., 2010), and environmental well-being (e.g. Farrell and Runyan, 1991; Andereck, 1995, Dyer et al., 2007; Simpson, 2008; Lee et al., 2010).

These researchers have identified the impact of tourism in various dimensions, through various indicators. However, to date, there has been little discussion on the local economic benefits from tourism activities in shopping and transportation sectors. Thus, the aim of the study is to explore the domestic and inbound tourists' expenditure pattern to identify the economic benefits for the local community in Melaka UNESCO World Heritage City, Malaysia. The study employed a diary record survey as a data collection tool and Chi-square Automatic Interaction Detection (CHAID) as the main analysis tool to critically examine the pattern of linkages. The paper is organized into four sections. Section 2 discusses the overview of tourist expenditure and local economy. Section 3 discusses the data collection and analysis method. Section 4 presents the discussion of the result and Section 5 concludes the study. The study contributes towards the strand of literature on tourists' expenditure and local economy.

2. Literature review

Malaysia has started to discover the opportunities in the value of tourism. The sector is now a potential area in environmental, social and economic level of government agendas, as it is an industry contributing significantly to the Malaysian economy. In addition, the Malaysian federal and state governments have taken major steps in establishing legal and institutional frameworks to introduce sustainable tourism. A study by Md. Anowar et al. (2013) explained that Malaysia has produced development plans for different durations, namely, the Tenth Malaysia Plan, Economic Transformation Program (ETP), National Tourism Policy, National Physical Plan (NPP), and Local Agenda 21 (LA 21). These development plans were introduced and implemented to promote and strengthen the concept of sustainable tourism in the country through various policies and regulations. In addition, according to the Economic Impact Report 2013 by the World Travel and Tourism Council (WTTC), the year 2012 has witnessed Malaysia generating 1,795,500 employment opportunities directly, indirectly, and induced by the tourism industry. This figure covers 6.5% of total employment in the country. In addition, the total contribution of the tourism industry was RM146.5 billion in 2012. This includes 44.6% direct contribution, 15.8% induced contribution and 39.6% indirect contribution from the industry. This figure justifies the country's effort to generate opportunities for local communities through the tourism industry. In another effort of the Malaysian government, various tourism concepts have been introduced such as eco-tourism that has been implemented in nature reserves or areas rich in natural resources, heritage tourism that has been implemented in conservation and heritage sites and shopping tourism that has been implemented in most major cities. These concepts are introduced in every tourism destination along with related products as a marketing strategy to attract the tourists. Tourism concepts have always been the main focus of discussion in many studies as it is believed to transform the image of an area, increase tourist arrival and tourist expenditure. However, the transformation, redevelopment and regeneration of an area will be more meaningful when it ensures that the local community, especially disadvantaged groups, are involved in the development of the tourism sector. In fact, it can establish equality through distribution of resources and opportunities (Ashley, Boyd and Good, 2000; Ashley & Roe, 2002; Goodwin, 2005).

The transportation sector in tourism development is recognized as a fundamental need (Middleton, 1998; Page, 2004; Thompson et al., 2006; Reilly et al., 2010) especially in relation to sustainable tourism (Gossling et al., 2009; Page and Connel, 2009). It assists tourist movement safely and comfortably (Masiero and Zoltan, 2013), provides employment to the local community, for example as drivers and conductors (Williams and Ponsford, 2009), as well as enhance the trading and business industry, in particular the tourism destination, with reliable and smooth transport connectivity (Gunnm 1988; Leiper, 2004; Lew and McKercher, 2006). As a result, this sector has been given much emphasis in government planning policies, as it is a major influence in any tourist destination (Peeters and Schouten, 2006). To date, there is a lack of empirical studies on transportation related to expenditure patterns among tourists and its local economic benefits. Much of the tourism studies attempt to explore transport choice behavior (Robbins and Thompson, 2007; Hough and Ahmed Hassanien, 2010), preference for mode choice (Wang and Li, 2002; Money and Crotts, 2003; Nerhagan, 2003; Koppelman and Sethi, 2005; Kim and Prideaux, 2005; Tsuar and Wu, 2005; Hess et al., 2007), travel characteristics (Morrison, 1989; Hseih et al., 1993; Vance, 2004; Hess et al., 2007) as well as tourist movement patterns (McKercher et al., 2012).

Similarly, the shopping sector in tourism development is one of the major activities (Kent et al., 1983; Choi et. al., 1999; MacCannell, 2002; Snepenger et al., 2003; Timothy, 2005) and common leisure activity among tourists in a destination (Choi, Chan, & Wu, 1999; Snepenger, Murphy, O'Connell, & Gregg, 2003) than other activities such as sightseeing and recreation (Reisinger and Waryzack, 1996). Moreover, Lehto (2004) and Moscardo (2004) have argued that shopping is a factor in tourist destination choice, as one-third of tourists spent 5-8 hours shopping and another one-third spent between 9 - 16 hours (Keown, 1989). This activity is increasingly important in the travel industry because of its significant economic contribution to the retail trade activities in various tourism markets globally (Norman, 1998; Jansen, 1998). Thus, shopping is well recognized by the main players in the tourism sector and also the government as a significant component in the tourism industry. So far, there have been few discussions and published research on tourist expenditure pattern in terms of shopping in heritage destinations, particularly in South East Asia. Most studies involving shopping expenditure have only been carried out in other dimensions, such as shopping behavior (Rosenbaum and Spears, 2005; Cox et al., 2005; Kemperman, 2009), preferences (Kim et al., 2011; Lo and Qu, 2015) and satisfaction of shoppers (Bitner and Hubber, 1994; Parasuraman et al., 1994; Johnson et al., 1995; McCollough et al., 2000; Turner and Reisinger, 2001).

3. Methods

3.1. Data collection

In examining the expenditure of tourists, two popular methods have been used in most tourism research, namely exit interviews and daily expenditure records during the visit. Exit interviews were introduced in early 60s, in which tourists will recall their spending in particular tourism destination or events and record the expenditure. However, Pearce (1988), Howard et al. (1991), Frechtling (1994), and Faulkner & Raybould (1995) found that many visitors had difficulties in recalling their activities and the expenditure. This is due to errors or recall bias in recording the expenditure. Based on Rylander et al. (1995), the errors occur when the complexity of transactions and the length of time between the visit and interview increases. Frechtling also added it is caused by memory decay. Thus, in order to reduce and eliminate the error, the diary record survey was introduced (Howard et al.; Rylander et al.) to record the daily activities and expenditure during their stay. A diary record survey was conducted to record the daily expenditure of domestic and inbound tourists in Melaka city. A total of 1500 survey booklets were distributed to 750 domestic and 750 inbound tourists among all star-rated (5, 4, 3, 2, and 1 star) and

budget hotels, however only 1000 surveys booklets were collected. The survey booklets were circulated during check-ins with a brief and proper explanation from the receptionist. The tourists were required to record their daily expenditure in the transportation and shopping sectors. After completing the booklet, they returned it to the receptionist during check-out. The survey was administered from March 2014 to April 2014, which included six weekdays and six weekends. It was not difficult to monitor and collect the respondents' answer booklets because the period was at the peak of the Malaysian tourism season due to school break and the Visit Malaysia 2014 tourism program.

3.2. Data analysis

Chi-squared automatic interaction detection (CHAID) was the main statistical method used in the study to determine the expenditure pattern. The exploratory statistical method was introduced by Kass in 1980, which was known as the decision tree analysis tool by a few researchers (e.g. Chen, 2003; Hsu and Kang, 2007). The method is one of the more practical ways of building the non-binary trees based on chi-square statistic that has been implemented in a wide range of researches (Kass, 1980; Chen, 2003; Lagoherel and Wong, 2006; Hsu and Kang, 2007; Assaker and Hallak, 2012), especially in tourism and travel research (Van Middlekoop, Borgers and Timmermams, 2003; Chen; Hsu and Kang; Assaker and Hallak). For instance, it is used to identify accommodation preferences (Chung, Oh, Kim and Han, 2004), and shopping preferences (Kim, Timothy, Hwang, 2011). CHAID analysis engaged XLSTAT statistical software to manage the continuous and categorical data. The study involved a criterion variable (dependent variable) which refers to domestic and inbound tourists; and the predictor variable (independent variable) which refers to total expenditure in transportation and shopping sectors. The expenditure of domestic and inbound tourists was split by using step-wise chi-square analysis into statistically significant homogeneous sub-groups that were identified as 'nodes'. Subsequently, contingency tables were built for each node. The process was continued until the decision tree reached a certain size. Finally, the summarization of results was done based on the sub-group diagrams or decision tree models created.

4. Data analysis

4.1. Tourists' expenditure linkages

Figure 1 below shows the results of the CHAID analysis. The dependent variable was domestic and inbound tourists and two descriptors splitting the nodes were shopping expenditure and transportation expenditure. Among the respondents (n=1000), 50% were domestic tourists, and 50% were inbound tourists. The first splitting variable was the total expenditure on transportation. In Node 2, 82.5% of respondents spent RM18.50 and below for transportation, whereby 45.3% were domestic tourists and 37.2% were inbound tourists. Meanwhile, 15.1% of respondents in Node 3 spent RM56.00-RM18.50, whereby 4.2% were domestic tourists and 10.8% were inbound tourists. Node 4 registered 2.3%, in which 0.3% were domestic tourists and 1.8% were inbound tourists. The second splitting variable was the total expenditure in shopping. Node 2 diverged into Node 5, Node 6, and Node 7. 69.7% of the total respondents in Node 5 spent RM75 and below on shopping, which covered 35% domestic tourists and 34.6% inbound tourists. In Node 6, 12.4% of respondents spent RM75.00-RM475.00, whereby 9.9% were domestic tourists and 2.5% were inbound tourists. In Node 7, 0.5% of respondents spent RM475-RM1200, which covered 0.3% of domestic tourists and 0.1% inbound tourists. On the other hand, Node 4 diverged into Node 8 and Node 9. In Node 8, 2.0% of respondents spent RM135 and below for shopping,

covering 0.2% of domestic tourists and 1.8% inbound tourists. In Node 9, 0.3% of tourists spent RM135-RM400 for shopping, whereby all 0.3% were domestic tourists

Fig. 1. CHAID analysis: tourists' expenditure linkages

4.2. Local economic benefits

Table 1. Cross-tabulation of transportation sector

Range_Transport * Transportation Mode Crosstabulation

Transportation Mode Total

Taxi Trishaw Bus Bicycle Walking No answer

Range Transport 1.00 84 7 38 6 683 8 826

Total 84 7 38 6 683 8 826

Table 2. Cross-tabulation of shopping sector

Range_Shopping * Shopping Venue Crosstabulation

Shopping Venue Total

Jonker Medan Mahkota Hard Rock Stadhuys Pahlawan No answer

Street Samudera Parade Shop market Mall

Range Shopping 1.00 508 87 23 9 11 34 25 697

Total 508 87 23 9 11 34 25 697

Table 1 above illustrates the cross-tabulation result between 826 tourists and the amount they spent on transportation modes, which were between RM0 - RM18.50. Walking was recorded as the most popular travel mode with 683 (68.3%) of the tourists choosing it, followed by 84 tourists (8.4%) travelling by taxi, 38 tourists (3.8%) travelling by bus, 7 tourists (0.7%) travelling by trishaw, 6 tourists (0.6%) travelling by bicycle. Eight tourists provided no answer. Table 2 above illustrates the cross-tabulation results between 299 tourists (29.9%) and shopping venue that they spent on, which was between RM0 -

RM75. Jonker Street was recorded as the most popular venue for shopping among tourists, with 508 tourists (50.8%) choosing this location. This was followed by 87 tourists (8.7%) shopping at Medan Samudera, 34 tourists (3.4%) shopping at Pahlawan Mall, 23 tourists (2.3%) shopping at Mahkota Parade, 11 tourists (1.1%) shopping at the Stadhuys market and 9 tourists (0.9%) shopping at the Hard Rock Shop. However 25 tourists (2.5%) provided no answer for the shopping venue.

5. Discussion

This study was one of few to examine the expenditure patterns of domestic and inbound tourists in Melaka city. It is essential for the host destinations to identify and understand the activities that are heavily spent by the tourists. The CHAID analysis above has clearly illustrated the expenditure patterns of domestic and inbound tourists in the shopping and transportation sectors. The result indicated the expenditure linkage (Node 2 and Node 5) recorded the highest percentage of tourists' spending for transportation and shopping activities. Contrary to previous research, this study found a similar pattern among domestic and inbound tourists in both sectors. It shows that both domestic and inbound tourists exhibited low expenditure in the transportation and shopping sectors. However, local entrepreneurs in the shopping sector receive direct economic benefits due to the high demand in Jonker Street, Melaka. In contrast, the transportation sector generates less economic benefit because most of the tourists chose to walk in Melaka city. There are several possible reasons for this result.

Domestic and inbound tourists spent more on shopping, and the money was mostly spent in Jonker Street Melaka. Jonker Street is known as an area dominated by the Chinese community. In fact, it is described as the center of the nine Chinese clan and dialect associations, which among others are Hokkien, Cantonese, Hainan, Teochew, Hokkienese and Hakka (Ong Puay Lui & Ong Puay Tee, 2003). The existence of these dialect associations stemmed from the mainland Chinese coming to Melaka as the early Chinese migrants in the mid-ninetieth centuries. Most of the shop houses in Jonker Street were bought by rich Chinese communities after the Dutch merchants left Melaka (Wan Hashimah Wan Ismail, 2013). Thus, all the commercial shop houses in Jonker Street now belong to the local Chinese Community of Melaka. Ong (2003) added that the local traders in Jonker Street have benefited a lot from their location. The operating costs are low due to relaxed laws and regulations as well as low overhead expenses. Ong described that the housing units of the traders were located on Jonker Street. Thus there was the opportunity to open shops in front of their house to earn additional income for their family. The locals were inspired to open small businesses for the tourists because of the encouragement of their dialect associations, as well as the high level of visitors' interest towards the cultural and heritage products of Melaka. This has provided them with a great opportunity to earn alternative income.

Based on the cross-tabulation result above, walking was chosen as a preferable mode of travel among tourists. Melaka city is a walkable city, equipped with various pedestrian facilities. Pedestrians can enjoy the scenery, which is mainly made up of historical and heritage monuments. The tourists believe that walking around Melaka city is a safe, cheap, accessible, convenient and pleasant activity and mode of travel from one destination to another. Moreover, the location of tourists' attractions is within walking distance, and few are reachable only by foot. The areas are St Paul's Hill area, Dutch Stadhuys area and Melaka River. Private vehicles may only be used on Jonker Street, Plaza Mahkota area and Kampung Morten. As an example, the famous and unique street, Jalan Tukang Emas which is the location of three major religious buildings: Kampung Keling Mosque, Kuil Sen Poyyata Vinayagar Moorthi, and Cheng Hoon Teng Temple, can only be accessed easily on foot. Tourists can only take a 5-minute walk from the Dutch Centre (red building). However, if they commute using vehicles, it may take 10-15 minutes, and they would need to circle the town to reach the destination as there are many one-way streets due to the

narrow lanes. In fact, the shortage of parking areas and parking coupon system have reduced the usage of vehicles in Melaka city.

6. Conclusion

The study has examined the expenditure pattern and local economic benefits of tourism in Melaka city. The results showed that domestic and inbound tourists have similar patterns of low spending on transportation and shopping activities. The shopping sector generated highest source of economic benefits especially for the local hawkers of Jonker Street Melaka while the transportation sector provides less local economic benefit as most tourists prefer to walk in Melaka city. The study serves as a base for future studies, generating a host of questions in need of further investigation on other tourism sectors, namely accommodation, entertainment, and food. The finding, however, makes several noteworthy contributions to the state government and private sector practitioners in developing tourism strategies and policies to improve the local economic development, hence promoting sustainable tourism.


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