Sustainability strategies have become central topics in the literature on tourism development, given the significant increase in tourism demand in Europe. This study examines the economic (cost) impact of increased tourism demand on the European Food and Accommodation Industry. We employed three distinct models — pooled linear regression, flexible nonparametric, and semiparametric smooth coefficients — using data spanning European countries from 2005 to 2020. Our findings reveal the heterogeneous impacts of tourist arrivals and length of stay on costs. Although the direct effects were predominantly positive, the indirect effects were found to be negative, resulting in a minor overall negative effect on the average. Furthermore, we found that the proportion of domestic tourists has a notable impact on costs, revealing that higher proportions are linked to lower direct costs but higher indirect costs on average. These findings provide valuable insights for industry stakeholders and policymakers alike.
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